BP BHEAD INT S [atlas:bill]

AN ACT Relating to water resource transfers; amending RCW 90.03.380, 90.44.100, and 90.14.140; adding new sections to chapter 90.03 RCW; adding a new section to chapter 90.44 RCW; and creating new sections.

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

I. POLICIES AND PURPOSES REGARDING WATER TRANSFERS

NEW SECTION. Sec. 1. A new section is added to chapter 90.03 RCW to read as follows:

DECLARATION OF POLICIES. The legislature declares that water transfers meeting the standards and procedural requirements of chapter . . ., Laws of 1999 (this act) are an important means of satisfying existing and future water demands in the state. Voluntary water transfers improve the administration of the state's existing water resources by increasing the flexibility of water supply and allocation, particularly during droughts and other water shortages. Creative approaches to reallocation of water usage through transfers and changes provide opportunities to address streamflow augmentation, to address salmon recovery needs, as well as to address water supply needs for growing communities and new industrial, commercial, and agriculture activities.

The legislature also declares that short-term and long-term water transfers serve the public interest by creating economic incentives to use water more efficiently and by allowing market processes to direct the distribution of developed water supplies.

The legislature further declares that the recognition and protection of water rights are in the public interest and are necessary to facilitate voluntary transfers of water.

The legislature recognizes that some water transfers may adversely affect a variety of third parties, including other water right holders, other lawful water users, municipal water supply entities, and other persons who use the state's water resources for their livelihood, recreation, and aesthetic enjoyment. To the extent that water transfers cause injury to other water users, water quality, fish and wildlife, other instream uses of water, ground water resources, and the regional economics of areas from which water is transferred, these third-party interests must be appropriately protected or compensated.

The legislature recognizes that Washington's water code, while allowing for transfers and changes in water rights, is silent or unclear on many subjects and may impede or prevent parties from pursuing innovative transfer agreements. Therefore, the legislature declares that it must take an active responsibility to eliminate unwise doctrinal barriers to achieving water transfers while assuring that other recognized water rights and uses are protected.

NEW SECTION. Sec. 2. LEGISLATIVE PURPOSE. In accordance with the policies set forth in section 1 of this act, the legislature intends by this act to enact a comprehensive set of laws to govern voluntary transfers of and changes in water rights, including:

(1) Expressly authorizing additional types of transfers of and changes in water rights in which the water code is silent or does not allow before the effective date of this section;

(2) Providing more opportunity for compensatory and consensual mechanisms in which third-party interests may be addressed and transfers allowed that would otherwise be prevented by the water code's no impairment rule;

(3) Improving the processing of applications for transfers and providing for expedited decisions upon short-term transfers, and ensuring that administrative functions relating to review of proposed transfers are adequately funded and do not require shifting fiscal resources from other important water resource management activities;

(4) Improving the collection, management, and accessibility of information relating to water rights transfers; and

(5) Providing assistance locally and at the state level to encourage water transfer transactions and the development of markets for water transfers generally.

II. ENCOURAGING TRANSFERS AND REDUCING UNCERTAINTY

NEW SECTION. Sec. 3. A new section is added to chapter 90.03 RCW to read as follows:

CHANGES IN SEASON. In addition to the changes authorized by RCW 90.03.380, the season of use may be changed to another season or to year-round use where such change can be made without detriment or injury to existing rights, including streamflows adopted by rule by the department or established as conditions upon the issuance of new water withdrawals. A person seeking approval of such change shall file an application with the department, which shall be processed as an application for change under RCW 90.03.380.

NEW SECTION. Sec. 4. A new section is added to chapter 90.44 RCW to read as follows:

CHANGES IN SEASON. In addition to the changes authorized by RCW 90.44.100, the season of use may be changed to another season or to year-round use where such change can be made without detriment or injury to existing rights, including streamflows adopted by rule by the department or established as conditions upon the issuance of new water withdrawals. A person seeking approval of such a change shall file an application with the department, which shall be processed as an application for change under RCW 90.44.100.

NEW SECTION. Sec. 5. A new section is added to chapter 90.03 RCW to read as follows:

CHANGES IN SOURCE OF WATER. (1) The source of water for an existing water right or permit may be changed from a surface water diversion to a ground water withdrawal or vice versa where the following requirements are met:

(a) The two sources are in direct hydraulic continuity;

(b) The change will not result in enlargement of the original water right; and

(c) The change can be made without detriment or injury to existing water rights, including streamflows adopted by rule by the department or established as conditions upon the issuance of new water withdrawals.

(2) The application for change shall be processed as an application for change under RCW 90.03.380 if the new source is surface water, and under RCW 90.44.100 if the new source is ground water.

(3) The new point of diversion shall retain the original date of priority. However, if within five years after approving the change the department finds that the change results in substantial interference with existing water rights that would not have occurred in the absence of the change, the new point of diversion shall be subordinate to any existing right injured by the change.

(4) The department shall approve an application to return to the last authorized point of diversion, while retaining the original priority date, if a water right holder submits an application to the department within five years after the department approves a change under this section.

Sec. 6. 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, including an instream use without physical diversion of water, 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. The department shall make a summary of the record of review of the application, and the proposed certificate, if the department proposes to approve the application, available to the public and provide a period of at least sixty days for the public to submit comments thereon. The public comment period may be reduced to fifteen days for short-term transfers of no more than two years in duration. The department shall consider the comments received and the entire record. 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) A person may change the place of use of a water right without the requirement of approval under this section where the water is used on land contiguous to the place of use of the water right, the land is owned by the holder of the water right, and the total amount of land to which the water is applied is not increased. Before making the change, the water right holder shall notify the department of the change and describe the land subject to the change in place of use.

(5) 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.

Sec. 7. RCW 90.44.100 and 1997 c 316 s 2 are each amended to read as follows:

(1) After an application to, and upon the issuance by the department of an amendment to the appropriate permit or certificate of ground water right, the holder of a valid right to withdraw public ground waters may, without losing the holder's priority of right, construct wells or other means of withdrawal at a new location in substitution for or in addition to those at the original location, or the holder may change the manner or the place of use of the water.

(2) An amendment to construct replacement or a new additional well or wells at a location outside of the location of the original well or wells or to change the manner or place of use of the water shall be issued only after publication of notice of the application and findings as prescribed in the case of an original application. The department shall make a summary of the record of review of the application, and the proposed amendment, if the department proposes to approve the application, available to the public and provide a period of at least sixty days for the public to submit comments thereon. The public comment period may be reduced to fifteen days for short-term transfers of no more than two years in duration. The department shall consider the comments received and the entire record. Such amendment shall be issued by the department only on the conditions that: (a) The additional or replacement well or wells shall tap the same body of public ground water as the original well or wells; (b) where a replacement well or wells is approved, the use of the original well or wells shall be discontinued and the original well or wells shall be properly decommissioned as required under chapter 18.104 RCW; (c) where an additional well or wells is constructed, the original well or wells may continue to be used, but the combined total withdrawal from the original and additional well or wells shall not enlarge the right conveyed by the original permit or certificate; and (d) other existing rights shall not be impaired. The department may specify an approved manner of construction and shall require a showing of compliance with the terms of the amendment, as provided in RCW 90.44.080 in the case of an original permit.

(3) The construction of a replacement or new additional well or wells at the location of the original well or wells shall be allowed without application to the department for an amendment. However, the following apply to such a replacement or new additional well: (a) The well shall tap the same body of public ground water as the original well or wells; (b) if a replacement well is constructed, the use of the original well or wells shall be discontinued and the original well or wells shall be properly decommissioned as required under chapter 18.104 RCW; (c) if a new additional well is constructed, the original well or wells may continue to be used, but the combined total withdrawal from the original and additional well or wells shall not enlarge the right conveyed by the original water use permit or certificate; (d) the construction and use of the well shall not interfere with or impair water rights with an earlier date of priority than the water right or rights for the original well or wells; (e) the replacement or additional well shall be located no closer than the original well to a well it might interfere with; (f) the department may specify an approved manner of construction of the well; and (g) the department shall require a showing of compliance with the conditions of this subsection (3).

(4) As used in this section, the "location of the original well or wells" is the area described as the point of withdrawal in the original public notice published for the application for the water right for the well.

NEW SECTION. Sec. 8. A new section is added to chapter 90.03 RCW to read as follows:

RECLAIMED WATER. The holder of any water right may transfer any reclaimed water, as defined in RCW 90.46.010(4), generated from the underlying beneficial use to another party for some other beneficial use that is in compliance with the standards and criteria adopted by the department or by the department of health, or both pursuant to chapter 90.46 RCW. Where such a transfer results in a change in the place of use of such water, the holder of the right shall apply for a change in place of use using the procedures in RCW 90.03.380. The department shall approve such a transfer as consistent with the public interest where such change can be made without detriment or injury to existing rights, including streamflows adopted by rule by the department or established as conditions upon the issuance of new water withdrawals.

NEW SECTION. Sec. 9. A new section is added to chapter 90.03 RCW to read as follows:

CHANGED OF DIVERSION POINT IN RESPONSE TO CHANGED SURFACE WATER LEVEL. In the event that government action results in or creates a reasonable expectation of a change in the surface level of a surface water source that impairs or threatens to impair access to a point of diversion authorized by a water right permit, certificate, or decree, the owner of the water right may change the point of diversion or add an additional point of diversion in accordance with this section in lieu of complying with the requirements of RCW 90.03.380. Before changing the point of diversion, the water right owner shall provide written notice of the proposed change to the department. Within thirty days after the department receives notice from the owner, the department shall, by order, approve the change unless the director finds the changes will result in injury to other existing water rights, including streamflows adopted by rule by the department or established as conditions upon the issuance of new water withdrawals. Where the point of diversion is located within one thousand feet of the existing point of diversion, there shall be a rebuttable presumption that such rights will not be impaired. All other terms and conditions of the water right shall remain in effect.

No fee may be charged for the department's review under this section.

Sec. 10. 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; or

(g) The temporary transfer of the water right to another who applies the water to beneficial use during the transfer.

(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.

NEW SECTION. Sec. 11. A new section is added to chapter 90.03 RCW to read as follows:

NOT EVIDENCE OF WASTE OR NONUSE. The offer of water or water rights for transfer, the transfer negotiations, the agreement to transfer water, and the application and supporting information for approval of a water transfer shall not be used as evidence of the transferor's waste or unreasonable use, or the nonuse, of the water or water rights made available for transfer, nor may the transfer of water cause, or be the basis of, an abandonment of any water rights or other right to use water.

NEW SECTION. Sec. 12. A new section is added to chapter 90.03 RCW to read as follows:

MITIGATION. (1) This section provides authority to the department to approve a transfer or change in which the potential detriment, injury, or impairment of existing rights as defined in RCW 90.03.380, 90.44.100, and sections 3 through 5 of this act, will be fully mitigated by the applicant through compensation, a substitute source of water, conditions upon the transfer, or other means of mitigation.

(2) The department may approve a transfer or change providing for mitigation of existing rights only where the applicant demonstrates the detriment, injury, or impairment will be fully mitigated. The applicant has the initial burden of demonstrating such mitigation.

(3) The department may not deny a transfer or change based upon detriment or injury to a party who has entered a mitigation agreement with the applicant.

(4) The department may not deny a transfer or change on the basis of the applicant's refusal to undertake mitigation that is not directly related to the potential detriment or injury to existing rights by the proposed transfer or change.

(5) The department may approve a transfer or change with conditions that will prevent detriment or injury to existing water rights, including streamflows adopted by rule by the department or established as conditions upon the issuance of new water withdrawals. The department shall not impose conditions on the approval of a transfer or change to mitigate the detriment or injury to such existing water rights or to mitigate harm to the economy in the area from which the water is to be transferred, that would be caused by factors other than the proposed water transfer.

NEW SECTION. Sec. 13. A new section is added to chapter 90.03 RCW to read as follows:

TRANSFER OF CONSUMPTIVE USE. (1) This section applies to the circumstances or types of transfers specified in this section for purposes of determining whether existing rights may be injured under RCW 90.03.380 and 90.44.100.

(2) The department shall accord the applicant a rebuttable presumption of no injury where the transfer or change will not increase the consumptive use under the water right. In determining the amount, the applicant shall provide evidence of the use during the five years preceding the application for transfer or change. For purposes of this section, "consumptive use" means that quantity of water consumed by the use such that reclamation or recycling of the water is not possible, the water does not return to instream use, and the water is not available for subsequent use by other water right holders in the basin.

(3) For water made available for transfer by changes in the acreage or type of crop irrigated by the transferor or by land fallowing or retirement, the applicant may choose to have the consumptive use under the right determined by application of the State of Washington Irrigation Guide published by Washington State University where the guide covers the soil, crop, and regional characteristics of the water use. There shall be a rebuttable presumption that the amount so determined may be transferred without detriment or injury to existing rights. The university shall update the guide at least once each biennium by consulting with interested persons throughout the state and by obtaining the comments of local, state, and federal agencies with expertise in hydrology, agriculture, and related subjects.

(4) For water transfer proposals no longer than two years in duration, the applicant has the initial burden of producing prima facie evidence that the transfer will not be detrimental to existing water rights. The establishment of a prima facie case shifts the burden of proof to those parties, if any, that have filed protests under the procedures of RCW 90.03.380 or 90.44.100, as applicable. The standard of proof under this subsection shall be a preponderance of the evidence.

III. WATER BULLETIN BOARDS

NEW SECTION. Sec. 14. A new section is added to chapter 90.03 RCW to read as follows:

REGIONAL WATER BULLETIN BOARDS. (1) Local water agencies, cities, counties, other local governmental agencies, and other interested parties may establish regional water bulletin boards. A regional board may be established by a single party or by agreement between two or more parties. A regional board may be established on a temporary or permanent basis. The purpose of such boards is to facilitate voluntary transfers of water within the region.

(2) Regional water bulletin boards may take any action to facilitate voluntary transfers of water, including but not limited to:

(a) Establishment of a list of current offers to sell and to purchase water and water rights;

(b) Acquisition of water for subsequent sale or distribution to members of the board or for sale to other willing buyers;

(d) Facilitation of transfers by management of water storage, water delivery, accounting, financing, or other matters relevant to the interests of the members of the board; and

(e) Provision of assistance to potential transferors and transferees in the negotiation and implementation of transfer agreements.

(3) All transfers or changes of water rights by or through regional water bulletin boards are governed by the applicable provisions of this chapter and chapter 90.44 RCW.

(4) Regional water bulletin boards shall not have exclusive jurisdiction over water transfers. Any person or entity may transfer water without the involvement of such a board.

IV. STREAMLINING REVIEW OF TRANSFERS

NEW SECTION. Sec. 15. A new section is added to chapter 90.03 RCW to read as follows:

PRIORITY PROCESSING OF TRANSFERS. (1) To further the policies in section 1 of this act, the department shall accord priority to the processing of applications for transfers and changes in water rights. The department shall adopt a goal of making decisions upon applications for changes limited to a single season within sixty days of receipt of the application, and for other changes within ninety days of receipt. Only in exceptional circumstances may a decision be made later than one hundred eighty days after receipt of a complete application.

(2) The department may process applications for transfers or changes regarding water uses in a basin independently of the order of processing or priority placed upon processing applications for new withdrawals within the same basin, and independently of the order of processing or priority placed upon any applications regarding water use in other basins.

NEW SECTION. Sec. 16. A new section is added to chapter 90.03 RCW to read as follows:

FUNDING OF REGULATORY REVIEW. (1) The department may enter into a voluntary written agreement with an applicant for a transfer or change to recover from the applicant the reasonable costs incurred by the department in conducting regulatory review of the application. The agreement shall specify the staffing and other resources to be committed by the department in processing the application, and shall establish deadlines for completing each of the major steps in conducting regulatory review. The agreement shall normally establish a deadline of making a decision no more than one hundred eighty days from the filing with the department of a complete application. The applicant's refusal to enter an agreement under this section shall not be the basis for otherwise delaying the processing of the application. The department may refuse to enter into an agreement in order to ensure sufficient processing resources for other pending applications.

(2) The costs remitted under this section shall be in addition to the fees required by RCW 90.03.470.

(3) The water transfers account is created in the state treasury. All receipts from costs collected under this section shall be deposited into the account. Expenditures from the account may be used only for the department's costs in the review of applications for transfers or changes covered by agreements under subsection (1) of this section. Only the director of the department or the director's designee may authorize expenditures from the account. The account is subject to allotment procedures under chapter 43.88 RCW, but an appropriation is not required for expenditures.

V. TRANSFER RECORDS AND DATA MANAGEMENT

NEW SECTION. Sec. 17. A new section is added to chapter 90.03 RCW to read as follows:

DATA COMPILATION. (1) The department shall create and maintain a water transfer registry of all final agreements concerning water rights transfers. The registry shall include the names of the parties to the transfer, the consideration paid for the transfer, a brief description of the transfer, and an explanation of changes in water storage, timing and point of diversion, place and purpose of use, consumption, and timing and point of return flow caused by the transfer. The department shall ensure that the registry is available in print form and over the internet. Other state and local agencies receiving information pertinent to such transactions, such as tax affidavits, shall cooperate with the department in maintaining the registry and making the information available locally to prospective water marketing participants.

(2) This section is intended to make accessible information that is otherwise in the public domain and does not require the disclosure of proprietary information that is protected from disclosure under any other law or authority.

NEW SECTION. Sec. 18. A new section is added to chapter 90.03 RCW to read as follows:

TRANSFERS OF LAND WITH WATER RIGHTS. Upon closing of a land transaction involving the transfer of a water right appurtenant to the land, the seller shall also deliver to the purchaser evidence of any permit, transfer approval, or certificate of water rights if the permit, transfer approval, or certificate is available. In addition, the seller shall notify the department on a form prescribed by the department of: (1) The real estate transaction; and (2) the water right involved in the transaction. The notice shall also be provided in the case of the sale of parcels of land from a subdivision or short subdivision of land to which a water right is appurtenant to each resulting parcel.

NEW SECTION. Sec. 19. A new section is added to chapter 90.03 RCW to read as follows:

KEEPING ADJUDICATION DECREES CURRENT. The department, acting through the office of the attorney general, shall use the information included in the water transfer registry authorized under section 17 of this act and other pertinent information to provide periodic summaries of transfers and changes in water rights in a basin in which a general adjudication decree has been entered within twenty years before the effective date of this section. The summary shall be filed with the superior court that entered the decree and entered of record in the proceeding for the purpose of advising interested persons of changes occurring since entry of the decree.

VI. MISCELLANEOUS

NEW SECTION. Sec. 20. PART HEADINGS AND SECTION CAPTIONS NOT LAW. Part headings and sections captions used in this act are not any part of the law.