"Sec. 4   RCW 90.46.130 and 2002 c 329 s 5 are each amended to read as follows:
     (1)(a) Except as provided in subsection (2) of this section, facilities that reclaim water under this chapter shall not impair any existing water right downstream from any freshwater discharge points of such facilities unless there is compensation or mitigation for such impairment ((is agreed to by the holder of the affected water right)).
     (b) Any reclaimed water project that reduces the quantity of sewage treatment plant effluent discharged directly into marine waters is deemed to not impair any existing water rights.
     (c) The department of ecology shall assemble and consult with interested parties to review the issue of potential impairment of existing water rights by reclaimed water projects and shall report the findings and any recommendations of this review to the appropriate standing committees of the legislature no later than December 31, 2007.
     (2) Agricultural water use of agricultural industrial process water and use of industrial reuse water under this chapter shall not impair existing water rights within the water source that is the source of supply for the agricultural processing plant or the industrial processing and, if the water source is surface water, the existing water rights are downstream from the agricultural processing plant's discharge points existing on July 22, 2001, or from the industrial processing's discharge points existing on June 13, 2002."