Rachael Paschal Osborn attorney at law

2421 West Mission Avenue Spokane WA 99201

509.328.1087 tel / 509.328.8144 fax

rdpaschal@earthlink.netw

Representative Kelli Linville

Chair, Committee on Agriculture & Natural Resources

Washington State Legislature

Olympia, Washington

Re: HB 1338

Dear Rep. Linville,

Thank you for the opportunity to provide testimony on House Bill 1338, the Governor's "municipal certainty" bill which would provide blanket immunity for thousands of municipal water rights at the expense of Washington's rivers and other water right holders. This is the most environmentally damaging proposal I have seen in a decade of reviewing state legislation. I urge you to reject this bill.

HB 1338 covers a lot of territory, including conferring standing on municipal water rights that are unperfected and of dubious validity; establishing water use efficiency and conservation "standards" that are largely optional; creating an environmental contract process based on as-yet unknown provisions of watershed plans; and promoting water right mitigation standards. This letter provides comments on each of these provisions.

Inchoate Water Rights. Section 6 of the Act provides that municipal inchoate water rights are considered to be in good standing. First and foremost, you must ask yourselvs, what is the effect of this provision? There are thousands of municipal water right certificates in Washington that were illegally issued by Ecology using a "pumps & pipes" quantification, rather than actual use. The 1997 "Theodoratus" Supreme Court decision cast doubt on the validity of these rights, a problem that this bill is attempting to correct.

At the time municipal inchoate water rights were issued, between the 1940's and 1980's, Ecology and its predecessors did not conduct assessments to determine the impacts of the full exercise of these rights on other water users and the environment. This is unfortunate, because these inchoate rights represent hundreds of millions, perhaps billions of gallons of water that is, today, flowing in our state rivers and aquifers, supporting water quality, habitat and recreational use of rivers. It is also likely that at least some of this water is being used by other water right holders.

Has the Governor's office provided an analysis of the potential environmental impacts and impairment that would be created by this bill? No. And indeed, if a credible analysis were provided, it would show that the impacts of this bill would devastate Washington's rivers, with commensurate harm to water quality and habitat, in violation of the Clean Water Act and the Endangered Species Act. The Governor's office has also failed to provide any analysis of how allowing municipal water users to "grow" into their water rights would affect other water users. The Washington Legislature should demand information about the impacts of this highly questionable proposal.

The immunity granted under this bill would hinge on a showing of "reasonably anticipated future needs" of up to 50 years. However, it is not possible to project population growth 50 years into the future. The Office of Financial Management, which performs population analysis for Growth Management and other purposes, projects not more than 30 years into the future, and even that includes a wide margin of error (eg., high, medium and low estimates).

This bill would also put municipal purveyors in charge of their own compliance, imposing requirements but without enforcement or other mechanisms by which the state can ensure that public resources are protected. For example, in Section 6, Part 2(b), how is a purveyor to be stopped from "further expansion of water use" when it is out of compliance with the requirements of that section?

Part 4's prohibition on state regulatory control over municipal inchoate water rights is unprecedented. Why would Washington repudiate its obligation to protect and control public resources? Where is the accountability? Part 5's provision that the water rights are subject to instream flows only with the consent of the water user provides insight into just how damaging this legislation would be if adopted: no municipal water user will voluntarily submit its water rights to interruption to protect rivers. How will our rivers be protected in the face of this proposal? The Legislature must ask and receive a satisfactory answer to this critical question.

Finally, Part 6 illustrates the folly of this approach by forbidding any future issuance of inchoate water rights. If it's bad idea for future water management, why is it an acceptable approach right now? The legislature should not use this bill to ratify thousands of invalid water rights, when it will only create huge problems for management of our state water resources in the future. Ironically, people who live elsewhere or are not yet born are being given greater consideration in this bill than are Washington present-day citizens and water users.

A few years ago, Ecology proposed a rule to address the municipal inchoate issue. That rule would have rescinded the invalid certificates and put them into permit status, subject to credible demand forecasting and environmental protections. That rule was withdrawn even before publication. The Legislature should review and adopt the approach proposed in that rule, giving paramount protection to our public waters and existing water rights.

Water Use Efficiency. Section 12 would direct DOH to create "standards" for water use efficiency. Water conservation is an excellent idea, an absolutely critical element of water management, and should be considered a major source of water for future growth. Indeed the legislature has endorsed this latter approach in RCW 90.54.020(7), which provides that "improved water use efficiency and conservation. . . will be a potential new source of water with which to meet future needs throughout the state."

Unfortunately, this bill will not make that statutory policy a reality. There are two overarching problems with Section 12 of HB 1338. First, conservation requirements for municipal water purveyors should not be tied to the inchoate water right problem. Water conservation should be mandatory, period. Combining inchoate immunity and a water conservation program gives the false illusion that water conservation will compensate for the damage that would occur if inchoate water rights are re-instated.

Second, HB 1338 will result in very little actual water conservation. This is because it gives water purveyors discretion to select their own conservation methods and to opt out if they determine these methods are not "cost effective." We can assess how much actual conservation we would get from this voluntary approach by looking at what utilities are doing now. With few exceptions, most water purveyors refuse to adopt meaningful conservation standards and many don't even comply with the single existing requirement for water conservation: public education.

Section 12 contains various requirements that are good ideas, including use of rate structures, water loss standards, water consumption data, credible demand forecasting, public process, and reductions in per capita or ERU consumption. Sections 13, 14 and 15, tying water conservation planning to sewer system and wastewater re-use planning are also good ideas. These requirements should, however, be mandatory and should in no way be tied to the inchoate water right problem.

The Legislature should educate itself on the topic of water conservation to determine what level of mandatory requirements are needed, and should disconnect water conservation requirements from ratification of inchoate water rights.

Environmental Contracts. Sections 16, 17, 20 and 21 would allow water purveyors the prerogative of moving their unperfected water rights in exchange for a dubious system of promises and IOUs, known as environmental contracts. These contracts would largely be based on the terms contained in hypothetical watershed plans, none of which have been completed to date. Most of the watershed planning units are in the middle of the planning process right now. The Legislature's confidence in this process may be misplaced and any new legislative concept dependent on watershed planning should certainly await the outcome.

Moreover, a number of the WPUs are dominated by utilities, who by virtue of the mandatory consensus process, can control the content of watershed plans. Thus, water purveyors who wish to move their inchoate water rights would actually be in charge of drafting the contract. In reality, an environmental contract process would subvert the potential for obtaining substantive measures in watershed plans; purveyors will simply veto plan conditions that they object to and which might end up in an environmental contract.

Finally, once a water right is moved and growth occurs based on that water right, it will be impossible to rescind the water use even if the purveyor is out of compliance with its contract. HB 1338 does not address, much less deal with this problem.

Environmental contracting is misguided concept. Rather than endorsing a "let's make a deal" approach to every water resource problem, it is time for the legislature to promulgate statutory standards that will lead to real and effective river protection and restoration. If we protect our rivers and aquifers first, all manner of certainty and flexibility can be granted to water purveyors without having to invent ever more tenuous methods to attempt to deal with the impacts.

Mitigation for Water Rights. Section 18 of HB 1338 authorizes Ecology and WDFW to approve mitigation for new or changed water rights. At present, Ecology imposes mitigation requirements on water rights but has promulgated no policies, guidance or regulations to govern that process and inform the public what the appropriate standards might be. Statutory guidance is appropriate, but this proposal does not go far enough. First, the process should not be tied to environmental contracts and should in no way apply to inchoate water rights. Second, the legislature should require Ecology to adopt rules &endash; the public is in the dark about what is and is not acceptable in the mitigation arena.

Third, the water user should pay. Monitoring, periodic re-evaluation, enforcement, etc. are expensive processes and can only be accomplished if funded. It is appropriate to make the water user bear that cost. Fourth, the bill endorses a variety of mitigation measures, both in-kind and out-of-kind. But the most frequent impact caused by water rights is reduction of streamflow in a manner that harms habitat, water quality, recreational and aesthetic uses. Legislation should specify that when a water right reduces streamflow in an over-appropriated river, out-of-kind mitigation is not an option.

Fifth, Part 5 of this section provides for modification of mitigation conditions only by "joint agreement" between Ecology and the water user. If mitigation is not working, why should the water user be given the power to veto amendments?

Finally, mitigation should not be tied to "consumptive use" (CU). A water right holder has the right to intensify its use and consume 100% of the quantities set forth in the water right. In addition, it is extremely difficult to credibly assess and verify actual CU. Unless and until Ecology begins quantifying water rights based on CU, mitigation requirements should be tied to the whole quantity of the water right.

In sum, HB 1338 is a flawed attempt to address municipal water right problems. While it contains a few good ideas, particularly with respect to water conservation and mitigation, it is fundamentally flawed because of its blanket validation of municipal inchoate water rights &endash; a move that would devastate Washington's rivers and aquifers, and likely impair the rights of other water users throughout the state. I respectfully urge the Senate Subcommittee on Natural Resources, Energy & Water to reject HB 1338.

Yours very truly,

/s/ rpo

Rachael Paschal Osborn

cc: Senate Committee members