BP BHEAD INT S [atlas:bill]

AN ACT Relating to public water systems; amending RCW 90.03.330; reenacting and amending RCW 43.21B.110; adding new sections to chapter 90.03 RCW; and creating a new section.

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

NEW SECTION. Sec. 1. In order to assist in the recovery of salmonid species that are listed or proposed for listing under the federal endangered species act while maintaining the economic vitality of the state of Washington, it is the intent of the legislature to improve water resource management laws. The intent of this act is to:

(1) Provide clarity and certainty regarding the legal status of public water system water rights that document a combination of water that has been put to beneficial use and water that has not been put to beneficial use. Clarity and certainty is necessary for purposes of planning for water supply, land use, watershed management, and growth management;

(2) Provide for the concurrent development of public water system inchoate water right permits and the restoration and protection of instream flows in geographic areas with salmonid stocks listed or proposed for listing as threatened or endangered under the federal endangered species act, or with salmonid stocks listed as critical or depressed under the state salmon and steelhead stock inventory;

(3) Encourage municipal water supply management to occur on a regionally coordinated basis, where practicable, in a fashion that balances the use of currently developed and future municipal water resources with protection of the natural environment and instream resources, including fisheries. Regional integrated management areas and regional water supply utilities are encouraged as an alternative means to achieve many of the objectives of this act. The objectives of preserving and enhancing the natural environment, including fishery resources, and of providing reliable and efficient water supplies to expanding populations, especially in urban areas, can be met in a complementary manner through the use of regional integrated management areas or by regional water supply utilities;

(4) Provide more flexibility for the movement of water from where it is available to where it is needed and provide a more certain future municipal water supply; and

(5) Promote an increase in the conservation and efficient use of water by public water systems.

Sec. 2. RCW 90.03.330 and 1987 c 109 s 89 are each amended to read as follows:

(1) Upon a showing satisfactory to the department that any appropriation has been perfected in accordance with the provisions of this chapter, it shall be the duty of the department to issue to the applicant a certificate stating such facts in a form ((~~to be~~)) prescribed by ((~~him~~)) the department, and such certificate shall ((~~thereupon~~)) be recorded with the department. Upon the request of a public water system, the department shall evaluate and issue if appropriate, incremental certificates of water right, not more than once every six years, that reflect either instantaneous or annual quantities of water, or both, perfected by actual beneficial use. The beneficial use of water must be demonstrated by pumping or diversion records, meter data, or other reasonable information showing the extent of actual beneficial use of water. Any original water right certificate issued, as provided by this chapter, shall be recorded with the department and thereafter, at the expense of the party receiving the ((~~same~~)) certificate, be transmitted by the department ((~~transmitted~~)) to the county auditor of the county or counties where the distributing system or any part thereof is located((~~, and~~)). The certificate shall be recorded in the office of such county auditor, and thereafter be transmitted to the ((~~owner thereof~~)) certificate holder.

(2) Certificates of water right held by public water systems that document a combination of water that has been put to beneficial use and water that has never been put to beneficial use, that have department of health approval for the source associated with the right, and for which the entity holding the certificate has constructed facilities in place to use the water authorized by the water right, shall be administered in the following manner:

(a) Any instantaneous or annual quantity of water that has been perfected by actual beneficial use of water before the effective date of this section shall remain a certificated right in good standing.

(b) Any instantaneous or annual quantity of water not perfected by beneficial use before the effective date of this section will be reinstated as a water right permit within the meaning of this chapter and the holder of the permit is authorized to continue development and use of water under the permit. The reinstated permit shall be administered by the department as an inchoate water right permit in good standing, with a priority date as of the original application, subject to the requirements of sections 4 and 5 of this act.

(3) For a permit held by a public water system reinstated by this section that has a department of health-approved number of connections and for which the original water right application filing was for a discrete number of connections, water use up to the department of health-approved number of connections as of the effective date of this section is allowed within the existing water service area of the public water system. If the public water system does not have an existing service area established under chapter 43.20 or 70.116 RCW, the place of use as authorized under the original certificate shall be the place of use for water that is reinstated to permit status under this section.

(4) For a permit held by a public water system reinstated by this section that has a department of health-approved number of equivalent residential units and for which the original water right application filing was made for a discrete number of connections, or for then-current population and future requirements of the municipality or community, water service shall be allowed up to the number of equivalent residential units approved by the department of health as of the effective date of this section for the existing service area of the public water system as established under chapter 43.20 or 70.116 RCW. Water service provided through interties must comply with RCW 90.03.383.

(5) For a permit held by a public water system reinstated by this section that has an unspecified number of connections in its department of health-approved water system plan and for which the original application filing was made for then-current population and future requirements of the municipality or community, water service shall be allowed to satisfy the water requirements of the existing service area as established under chapter 43.20 or 70.116 RCW. Water service provided through interties must comply with RCW 90.03.383.

NEW SECTION. Sec. 3. (1) Any public water system asserting that it holds a certificate of water right that documents a combination of water put to beneficial use and water not yet put to beneficial use shall provide evidence to the department demonstrating that the criteria in RCW 90.03.330(2) are met such that a superseding certificate and water right permit should be issued. A demonstration of meeting the criteria of RCW 90.03.330 shall be through existing planning programs and processes of the department of health or ecology to the extent practicable. All class A public water systems asserting they hold a certificate of water right water that documents a combination of water put to beneficial use and water not yet put to beneficial use shall initially document compliance with RCW 90.03.330 not less than two years and not more than eight years from the effective date of this section. All other public water systems asserting they hold a certificate of water right water that documents a combination of water put to beneficial use and water not yet put to beneficial use shall initially document compliance with RCW 90.03.330 not less than four years from the effective date of this section, unless requested by the department to do so sooner. If the department, upon reviewing a public water system plan or other applicable information, determines that the system has an inchoate water right as provided in RCW 90.03.330, the department shall issue a superseding certificate for the portion of the right that has been put to beneficial use and shall issue a permit for the inchoate portion of the water right that is reinstated to permit status. The permit shall have a development schedule and be conditioned with the performance standards created by section 4 of this act. The development schedule shall be twenty years from the effective date of this section with the option to extend if good cause is shown under RCW 90.03.320, except that the department may:

(a) Authorize a development schedule longer than twenty years, but not more than fifty years, if a planned need is demonstrated, and (i) a withdrawal facility with a hydraulic capacity beyond that needed for twenty years was constructed, or (ii) debt service requirements extend for such a period;

(b) Authorize a development schedule of less than twenty years if the permittee, with reasonable diligence, can perfect the permit in a shorter period of time; or

(c) Deny any time for further development if there is no demonstrated need for the water based on the water system plan or other applicable information.

(2) Upon any determination of noncompliance with the performance standards created by section 4 of this act, the permittee shall be granted, by written notice, a reasonable period of time to comply. If the permittee receiving such a notification disagrees with the department's determination of a reasonable time for compliance, it may, at its election, initiate nonbinding mediation with the department to resolve the dispute. After mediation, if the dispute is not resolved, the state shall issue an order to effect the performance standards. The order is appealable to the pollution control hearings board.

(3) At the end of the construction schedule authorized in the permit, the permittee may request an extension of time only as provided in RCW 90.03.320.

(4) The department shall process requests made under this section generally in the order in which received.

NEW SECTION. Sec. 4. (1) Any permittee with a water right permit reinstated under RCW 90.03.330 must meet the performance standards of this section. Demonstration of compliance with performance standards shall be through existing planning programs and processes of the department of health or ecology to the extent practicable. All class A public water systems asserting they hold a certificate of water right water that documents a combination of water put to beneficial use and water not yet put to beneficial use shall initially document compliance with RCW 90.03.330 not less than two years and not more than eight years from the effective date of this section. All other public water systems asserting they hold a certificate of water right water that documents a combination of water put to beneficial use and water not yet put to beneficial use shall initially document compliance with RCW 90.03.330 not less than four years from the effective date of this section, unless requested by the department to do so sooner. If the permittee complies with the performance standards, it will be in compliance with RCW 90.03.320. The performance standards are:

(a) Evidence demonstrating a need for the water within the development schedule specified by the permit consistent with demand forecasts prepared in accordance with the demand forecasting methods specified by the departments of ecology and health;

(b) Evidence that the water system's use of water is fully consistent with approved local land use planning within the constraints of water availability and cost;

(c) Evidence that water use meets state conservation and water use efficiency requirements existing at the time the documentation is submitted;

(d) Current information on how the utility's recent and proposed beneficial use of water under the permit is consistent with state and federal laws legally applicable to water use under the permit;

(e) Evidence of participation by the permittee, to the extent practicable, in watershed planning under chapter 90.82 RCW, coordinated water system planning under chapter 70.119 RCW, or other collaborative watershed planning efforts, if initiated; and

(f) Evidence of participation in and implementation of agreements under section 5 of this act, as required.

(2) For the performance standards in subsection (1) of this section, the department of health is responsible for ensuring compliance with subsection (1)(a) through (c) of this section and the department of ecology is responsible for ensuring compliance with subsection (1)(d) through (f) of this section when compliance with the performance standards is identified in a water system plan. If no water system plan is required, the department of ecology is responsible for ensuring compliance with all performance standards.

NEW SECTION. Sec. 5. (1) Where the source of water authorized for diversion under a permit reinstated by section 3 of this act is either a surface water source or a ground water source that is interconnected with a surface water body that provides habitat for salmon or trout populations listed or proposed for listing under the federal endangered species act or determined by the department of fish and wildlife to be depressed or critical, and where water can be used to protect and restore streamflows that are needed by such species and stocks, the public water system shall enter into and implement a binding agreement with the departments of ecology and fish and wildlife to specify how inchoate water is developed concurrently with the restoration and protection of streamflow necessary for the recovery of such fish species.

(2) In developing binding agreements with permittees under this section, the departments of fish and wildlife and ecology shall give priority to water systems having more than one thousand service connections. Agreements with water systems having fewer than one thousand service connections shall be a priority, if the system's water source is identified as a priority by the department of fish and wildlife in consultation with other concerned state agencies. Public water systems are encouraged to join together for purposes of concluding agreements under this section and to do so on a watershed or multiwatershed basis to promote the recovery of fish stocks and efficient delivery of public water supply.

(3) The purpose of the binding agreement is to identify and make mutual commitments to:

(a) Take immediate actions to arrest the further decline in fish stocks;

(b) Establish, protect, and restore an instream flow that is sufficient to restore and maintain properly functioning habitat conditions to support a harvestable supply of fish. Any instream flows that are established in connection with a binding agreement for a water resource inventory area, as defined by chapter 173-500 WAC, overlaying the same geographic areas that received a grant from the department under chapter 90.82 RCW shall be interim unless and until such planning for instream flow, if applicable, is complete under chapter 90.82 RCW. Interim instream flows established shall be conservative with regard to preserving instream values. Before establishing an instream flow under this section, the department shall engage in government-to-government consultation with affected tribes regarding the setting of such flows;

(d) Establish benchmarks or milestones that can be used to objectively measure the success in the recovery and maintenance of the listed salmonid stocks; and

(e) Establish provisions for an adaptive management approach to modify the binding agreement to effect its goal.

(4) If a binding agreement is not developed and signed by the departments of ecology and fish and wildlife and the permittee within two years of the effective date of this section, the permittee's use of water from the effective date of this section under the permit shall be subject to applicable source instream flows created by rule existing as of the effective date of this section. If instream flows have not been established by rule or the rule's instream flow is insufficient, an instream flow shall be specified by the department in consultation with the department of fish and wildlife under RCW 75.20.050 by permit proviso, and the permit shall be subject to any future instream flows adopted or amended by the department.

(5) Within four years of the effective date of this section and every three years thereafter, the department, in consultation with the department of fish and wildlife, shall review the binding agreement and its implementation to determine its effectiveness in contributing to the recovery and maintenance of the listed salmonid stocks. The review shall also assess the actions of all parties to implement the agreement. If the department of ecology determines by written findings that a permittee who is party to the binding agreement has failed to abide by the agreement, it shall condition the use of water under the permit, from the effective date of this section, to applicable instream flows created by rule existing as of the effective date of this section. If instream flows have not been established by rule or the rule's instream flow is insufficient, an instream flow shall be specified by the department in consultation with the department of fish and wildlife under RCW 75.20.050 by permit proviso, and the permit shall be subject to any future instream flows adopted or amended by the department.

(6) If any permittee who is party to a binding agreement disagrees with any determinations made by the department under this section, the permittee may elect to initiate nonbinding mediation with the department to resolve a dispute. After mediation, if the dispute is not resolved, the permittee may appeal any findings made by the department to the pollution control hearings board.

(7) This section does not waive any other requirement of the law related to the use of water.

NEW SECTION. Sec. 6. In order to meet the objectives of sections 7 through 11 and 13 through 15 of this act, any two or more public water purveyors, including purveyors of reclaimed water, and federally recognized tribes, may petition the department for designation of, and approval of a regional integrated water supply management agreement for a specific geographic area. Counties may, at their option, participate within the scope of their existing authority and responsibility in the development of regional integrated water supply management agreements for areas within their jurisdiction, and may be signatories to the agreement. The department shall coordinate its review of such a petition with the departments of health, community, trade, and economic development, and fish and wildlife, and shall, if necessary, enter into such agreements with those agencies as are necessary to carry out the purposes of sections 7 through 11 and 13 through 15 of this act. Approval and implementation of a regional integrated water supply management agreement, under the procedures in section 10 of this act shall be in place of the following provisions of this act, where applicable: (1) The authorized development schedule for inchoate water right permits under section 3 of this act; (2) the performance standards for the development of inchoate water right permits under section 4 of this act; (3) the binding agreement for development of inchoate water right permits under section 5 of this act; and (4) the requirements for the movement of inchoate water right permits under section 15 of this act.

NEW SECTION. Sec. 7. A regional integrated water supply management agreement shall constitute an interlocal agreement subject to chapter 39.34 RCW. At least one of the participants to the agreement must be a public agency eligible to enter into an interlocal agreement under chapter 39.34 RCW. In order for any other person or entity to become a participant in the regional integrated water supply management agreement, that person must contract with the public agency eligible to enter into an interlocal agreement under chapter 39.34 RCW. The regional integrated water supply management agreement shall identify and make mutual commitments to address the following:

(1) An implementation program that provides for immediate and long-term actions to protect and enhance instream flows, on both mainstem rivers and tributaries that are affected by water supply withdrawals or suitable for supplementation by the participants in the agreement. This program shall be in the context of an adaptive management framework that is designed to achieve the goals of a harvestable supply of fish and growth management objectives;

(2) Assurances of the signatories' participation in, support of, and assistance to the department in its development of, a timely and scientifically relevant assessment of the instream flow needs for aquatic habitat for anadromous fish within the water resource inventory areas affected by the regional integrated water supply management agreement. For purposes of this subsection, "timely" means no later than six years following the department's approval of the agreement or an earlier time in the discretion of the department. The department shall use the assessment, and other relevant information, in consultation with the department of fish and wildlife and affected tribes, to establish instream flow requirements throughout the water resource inventory areas affected by the regional integrated water supply management agreement. The agreement shall specify how the costs of the assessment would be divided among the signatories, the affected counties, the state, and other parties. The department may approve actions under regional integrated water supply management agreements based on provisional flow regime commitments during the time period while the work of assessing and establishing instream flow requirements is being accomplished. Provisional instream flows shall be established that are conservative with regard to preserving instream values. These actions may involve using a quantity of inchoate water in the long term where consistent with commitments contained in the regional integrated water supply management agreement. These actions do not relieve the parties to the agreement from their burden to address instream flow requirements established subsequent to the assessment;

(3) Establishment of applicable water use and conservation standards consistent with state standards adopted by rule for the participating agencies and provisions for effective monitoring and enforcement thereof;

(4) Inclusion of reclaimed water, as part of the overall resource strategy, where both physically and economically feasible, including environmental considerations, within the management area, as determined by applicable state law, or otherwise in the absence of state law;

(5) Water supply interties involving the participating utilities and any needed applications for change to water rights;

(6) Duration of the agreement, as well as provisions for extension, and procedures for amendment of the agreement and area designation to conform to later changes in water service areas and planning elements required under chapter 36.70A RCW, to provisions of watershed plans adopted under chapter 90.82 RCW or similar collaborative watershed planning processes, and to the addition of other agencies as participants to the agreement after its initial date of designation and approval;

(7) Strategies for accomplishing the actions proposed in the agreement, including roles, responsibilities, schedules, benchmarks, objective measurements, and monitoring;

(8) Procedures for (a) periodic joint review by the participants, counties, and the state, working jointly for a consolidated review by the departments of ecology, health, and fish and wildlife, and community, trade, and economic development at no greater than six-year intervals, to determine whether any modifications are necessary to accomplish the original purposes and objectives of the agreement; (b) recertification of consistency with applicable provisions of chapter 36.70A RCW, as necessary to achieve continued progress toward the purposes and objectives of the agreement; and (c) dispute resolution between the participating parties and the state concerning such modifications;

(9) Assurances that participants to the agreement have the requisite authority, ability, and commitment to accomplish the actions and achieve the objectives of the management agreement, including a description of general financing strategies, including anticipated state or federal funding. Such assurances may include establishment of a water master under RCW 90.03.070 or stream patrol under chapter 90.08 RCW, where appropriate; and

(10) Procedures and requirements to be followed upon withdrawal of a participant or upon termination of the agreement to ensure that objectives and accomplishments in meeting the needs of people and fish are protected.

NEW SECTION. Sec. 8. Upon completion of preparation of an agreement that documents compliance with the requirements of section 7 of this act, participants may petition for the establishment of a regional integrated water supply management area. Such petitions shall include the following:

(1) Evidence of consistency, and assurances of compliance, with land use and utility service provisions of comprehensive plans and development regulations, adopted under chapter 36.70A RCW, of those counties, cities, and towns located, in whole or in part, within the management area. Such evidence shall include a certification from each county and city planning under chapter 36.70A RCW and located partially or wholly within the proposed regional integrated water supply management area that the proposed regional integrated water supply management agreement assures water supply consistent with all comprehensive planning policies and development regulations related to land use, utility service, and growth targets adopted by that county or city under chapter 36.70A RCW;

(2) Evidence of consistency with existing approved plans, including water system plans or coordinated water system plans, and identification of proposed changes to such plans necessary to conform them to provisions of the agreement;

(3) Identification of existing documents or portions thereof on which the participants propose to rely, including flow agreements in habitat conservation plans, hydropower facility licensing agreements, or other similar documents developed to respond to species listed under the federal endangered species act; and

(4) A description of activities undertaken by the participants to consult with affected parties, including tribes with adjudicated fishing rights or reservation lands located within the management area, and county governments that elect not to participate in the agreement.

NEW SECTION. Sec. 9. Concurrently with its approval of a regional integrated water supply management agreement under the process described in section 10 of this act, the department shall make decisions and issue appropriate documentation as necessary to change water right claims, permits, and certificates of the participating utilities to combine the service areas of the participating utilities, as identified in water system plans approved under chapter 43.20 RCW, and if otherwise required in coordinated water system plans adopted under chapter 70.116 RCW, as the authorized place of water use, and to establish a schedule or schedules for the perfection of inchoate water rights consistent with the scope of the agreement.

NEW SECTION. Sec. 10. The procedures for designation of a regional integrated water management area and approval of a management agreement shall be as follows:

(1) Upon receipt of a petition, the department shall notify all affected state agencies and tribes and shall instruct the petitioners to publish notice thereof in a form and within a time prescribed by the department in a newspaper of general circulation published in the county or counties to be included in the proposed regional integrated water supply management area, and in such other newspapers as the department may direct, once a week for two consecutive weeks. The public comment period shall run for ninety days following the second publication date. In addition, the department may use other means it deems appropriate to obtain comment from the general public and persons that may have particular interest in the terms of the petition.

(2) After the close of the public comment period, the department shall consult with all affected state agencies, including the departments of health, community, trade, and economic development, and fish and wildlife, and it shall invite consultation with any tribe with adjudicated fishing rights or reservation land located within the management area. In addition, the department shall invite consultation with any county, city, or town not a participant to the agreement, located wholly or partially within the management area, for purposes of determining compliance of the agreement with plans adopted under chapters 36.70A, 43.20, 90.82, and 70.116 RCW. If it determines that the petition and associated agreements adequately satisfy the requirements of sections 7 through 12 and 13 through 15 of this act, and that no existing water rights will be impaired thereby, it shall approve the petition, if the departments of health and fish and wildlife concur.

(3) The department's decision to approve or disapprove a petition shall be appealable to the pollution control hearings board within thirty days of its decision.

NEW SECTION. Sec. 11. A water supply utility that is not a participant to a regional integrated water supply management agreement, but that has a service area located wholly or partially within the boundaries of a management area, may continue to provide water to its service area, consistent with an approved water system plan, the terms of sections 7 through 11 and 13 through 15 of this act, and any other applicable federal or state law.

Sec. 12. RCW 43.21B.110 and 1998 c 262 s 18, 1998 c 156 s 8, and 1998 c 36 s 22 are each reenacted and amended to read as follows:

(1) The hearings board shall only have jurisdiction to hear and decide appeals from the following decisions of the department, the director, local conservation districts, and the air pollution control boards or authorities as established pursuant to chapter 70.94 RCW, or local health departments:

(a) Civil penalties imposed pursuant to RCW 18.104.155, 70.94.431, 70.105.080, 70.107.050, 88.46.090, 90.03.600, 90.48.144, 90.56.310, and 90.56.330.

(b) Orders issued pursuant to RCW 18.104.043, 18.104.060, 43.27A.190, 70.94.211, 70.94.332, 70.105.095, 86.16.020, 88.46.070, 90.14.130, 90.48.120, and 90.56.330.

(c) The issuance, modification, or termination of any permit, certificate, or license by the department or any air authority in the exercise of its jurisdiction, including the issuance or termination of a waste disposal permit, the denial of an application for a waste disposal permit, the modification of the conditions or the terms of a waste disposal permit, or a decision to approve or deny an application for a solid waste permit exemption under RCW 70.95.300.

(d) Decisions of local health departments regarding the grant or denial of solid waste permits pursuant to chapter 70.95 RCW.

(e) Decisions of local health departments regarding the issuance and enforcement of permits to use or dispose of biosolids under RCW 70.95J.080.

(f) Decisions of the department regarding waste-derived fertilizer or micronutrient fertilizer under RCW 15.54.820, and decisions of the department regarding waste-derived soil amendments under RCW 70.95.205.

(g) Decisions of local conservation districts related to the denial of approval or denial of certification of a dairy nutrient management plan; conditions contained in a plan; application of any dairy nutrient management practices, standards, methods, and technologies to a particular dairy farm; and failure to adhere to the plan review and approval timelines in RCW 90.64.026.

(h) Any other decision by the department or an air authority which pursuant to law must be decided as an adjudicative proceeding under chapter 34.05 RCW.

(i) Approval or denial of a regional integrated water supply management agreement under chapter 90.03 RCW.

(2) The following hearings shall not be conducted by the hearings board:

(a) Hearings required by law to be conducted by the shorelines hearings board pursuant to chapter 90.58 RCW.

(b) Hearings conducted by the department pursuant to RCW 70.94.332, 70.94.390, 70.94.395, 70.94.400, 70.94.405, 70.94.410, and 90.44.180.

(c) Proceedings by the department relating to general adjudications of water rights pursuant to chapter 90.03 or 90.44 RCW.

(d) Hearings conducted by the department to adopt, modify, or repeal rules.

(3) Review of rules ((~~and regulations~~)) adopted by the hearings board shall be subject to review in accordance with the provisions of the Administrative Procedure Act, chapter 34.05 RCW.

NEW SECTION. Sec. 13. A regional integrated water supply management agreement shall not supersede provisions of:

(1) A habitat conservation plan; safe harbor agreement; or conservation agreement approved under the federal endangered species act; or

(2) A federal hydropower license dealing with instream flows or habitat conservation.

NEW SECTION. Sec. 14. (1) In order to meet the objectives of sections 7 through 11 and 13 through 15 of this act, any public water system with a service area, as specified in a water system plan approved under chapter 43.20 RCW or in coordinated water system plan adopted under chapter 70.116 RCW, that constitutes all or a significant portion of one or more counties, and that is governed by a board of directors or commissioners elected from the general population of the area served by the system, and that is a certified satellite management agency under RCW 70.116.134 may petition the department for designation of, and approval as a regional water supply utility. The department shall coordinate its review of such a petition with the counties with land use jurisdiction in the petitioner's service area, the departments of health, community, trade, and economic development, and fish and wildlife.

(2) Designation of and approval as a regional water supply utility shall be accomplished through an interlocal agreement under chapter 39.34 RCW between the department and the petitioning public water system. The interlocal agreement shall delineate the purpose and obligations of regional water supply utility. The department's approval of any regional water supply utility shall be the same as provided in the petition as to form and approval of a regional integrated management area.

(3) The department may approve applications for change of water right or inchoate water right permit under this chapter held by any entity, when that entity's operation and management of public water supply is to be taken over by a regional water supply utility and the water right held by that entity will be used by the regional water supply utility if each individual inchoate water right or permit for diversion or withdrawal is limited to two hundred fifty gallons per minute instantaneous volume and two hundred fifty acre-feet per year annual quantity or less and the regional water supply utility proposes to mitigate for any impacts potentially created by changes to the right. Certificates or permits may be modified at the request of the regional water supply utility to fall within this limitation.

(4) Any water resource mitigation undertaken by the regional water supply utility shall be maintained and effective for the duration of the water right. Mitigation measures are subject to evaluation regarding their effectiveness on an annual basis and may be modified, as necessary, by joint agreement between the department and the regional water supply utility to maintain a standard of no new impact from the change or amendment.

NEW SECTION. Sec. 15. The department shall approve an application for change that proposes to change or transfer an inchoate water right permit from one public water system to another or to expand the place of use of an existing public water system if in addition to the requirements of RCW 90.03.380:

(1) The proposed change will authorize the use of water consistent with a state-approved water system plan under chapter 43.20 RCW or a regional integrated water supply management agreement under section 10 of this act, and any approved comprehensive plan under chapter 36.70A or 36.70 RCW, or in the absence of such a plan, an approved plan under chapter 35.63 RCW. The department shall review water right issues concurrently with department of health review of the associated water system plan describing any proposed transfer of water. Any transfer of more than two million gallons of water per day across a water resource inventory area boundary must be consistent with an approved watershed plan under chapter 90.82 RCW, coordinated water system plan under chapter 70.116 RCW, regional integrated water supply management agreement approved under section 10 of this act, or a similar plan. In the absence of such a plan, the department shall secure the approval of all counties affected by the transfer before approval of the change;

(2) The public water system has implemented water conservation measures so that its water use meets or exceeds state performance standards. For transfers of water by intertie, the receiving public water system's conservation performance must be equivalent to or exceed the sending system's performance; and

(3)(a) The use of water is subject to instream flows to protect the quality of the natural environment as provided in RCW 90.54.020(3)(a) or 75.20.050 and a contribution to flow restoration is made as provided under (b) of this subsection. The department shall condition the use of water with any instream flow proviso on the water right permit proposed for change or any applicable instream flows contained in an adopted rule, unless the department, in consultation with the department of fish and wildlife, determines that the applicable instream flow is not sufficient. Interim instream flows shall be established that are conservative with regard to preserving instream values. Any interim instream flow placed as a proviso on an approved change under this section is effective until permanent instream flows are developed under a watershed planning program under chapter 90.82 RCW, or in the absence of such a program, by the department under chapters 90.22 and 90.54 RCW. Before establishing an instream flow under this section, the department shall engage in government-to-government consultation with affected tribes regarding the setting of such flows.

(b) In addition to the provisions of (a) of this subsection, in areas where adopted minimum instream flows have not been met in eight of the most recent ten years, the department shall require the applicant to provide a contribution to assist in the restoration of aquatic ecosystems in the affected watershed or watersheds equal to ten percent of the volume or value of the unused water to be transferred. The contribution can be a transfer of water to the state trust water rights program or, at the applicant's discretion, a one-time monetary contribution. For a monetary contribution, the applicant proposing the transfer shall remit to the state treasurer a payment based on the value of the water as determined by a licensed independent real estate appraiser selected by agreement of the department and the applicant. The cost of the appraisal shall be borne by the applicant. Any funds conveyed to the state under this section shall be deposited in the state streamflow restoration account established in chapter ..., Laws of 1999 (Senate Bill No. 5289). If Senate Bill No. 5289 is not enacted by July 1, 1999, such funds shall be deposited to the state reclamation revolving account and used solely for the acquisition of water rights for streamflow restoration in transactions with willing lessors and sellers.

NEW SECTION. Sec. 16. Nothing under this act, including decisions made under the authority of this act, may impair any existing water right.

NEW SECTION. Sec. 17. Sections 3 through 11 and 13 through 16 of this act are each added to chapter 90.03 RCW.