Mitigation for Domestic Uses in Closed Basins: Water Banking and Other Mitigation Measures

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August 09, 2018


Over the past decade the Washington Department of Ecology has taken affirmative steps to limit new groundwater withdrawals. Many have raised the concern that the proliferation of small groundwater uses, usually exempt from permitting, have a cumulative effect on the ability of other water right holders to exercise their rights and contribute to the degradation of instream flows required for fish and wildlife. Over the past decade, Ecology adopted administrative rules in four watersheds that require new water users to mitigate for new uses of groundwater: the Upper Kittitas County area of the Yakima River Basin;1 the Skagit River Basin;2 the Walla Walla River Basin;3 and the Dungeness portion of the Elwha-Dungeness Resource Inventory Area.4 Each watershed has its own unique hydrologic, water right and anthropological circumstances and those circumstances have driven what mitigation measures are required.

This paper intends to provide an overview of the process to establish a new small domestic groundwater withdrawal in basins that have been closed for further appropriation of water. Specifically, this paper will focus on the use of  water for new residential development that is outside of the service area of existing public water systems and without a pre-existing water right. The purpose of this paper is to highlight different mitigation measures that may address the impact of a new domestic use of water. The exact mitigation measures needed to address the impact of a specific project is wholly dependent on the proposed project and the characteristic of the surrounding natural resources. The first section will provide a brief overview of the legal framework for new domestic groundwater withdrawals. The second section will consider mitigation measures that are used in areas of the state or may be considered for new development of small groundwater uses.


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To develop a water source for a new residence that is outside of the service area of an existing public water system, a project proponent will need to demonstrate to the land use authority that water is physically available and legally authorized.5 The physical availability of water is administered under state and local health regulations and requires that a well produce water in a sufficient quantity and meet water quality standards. The project proponent is also required to demonstrate that the use is legally authorized either through an established water right or compliance with the Water Code and Ecology’sadministrative rules.


Health and safety requirements are administered by the State and by the local health district. The Safe Drinking Water Act allows the U.S. Environmental Protection Agency (EPA) to delegate primary enforcement responsibility for federal drinking water requirements to a State that enacts drinking water regulations that are no less stringent than federal requirements.6 The Washington State Department of Health (WDOH) administers the federal safe drinking water program and regulates the construction and operation of public water systems. Any water conveyance system providing water for human consumption for more than one single-family residence is considered a “public water system” under the State drinking water program.7

Washington State’s drinking water program creates two size categories of public water systems and extends more stringent requirements to larger systems. The State program designates public water systems with 15 or more connections that serve at least 25 individuals as “Group A” systems. Any public water system that serves a transient population of “twenty-five or more different people each day for sixty or more days within a calendar year,” also is classified as “Group A Public Water Systems.”8 A public water system that serves 2 to 14 connections is classified as a “Group B” public water system.9 Generally, Group B public water systems are regulated by county health departments, and Group A public water systems are regulated by the State Health Department.

Any new or expanding water system is required to adopt a water system plan (WSP).10 The WSP provides the WDOH with the means to verify that a water system complies with the system capacity requirements of the Federal Safe Drinking Water Act. The WSP must demonstrate the water system has the technical, managerial, and financial capacity to comply with all local, state and federal regulations. Furthermore, WDOH must approve individual project reports and construction documents for Group A water systems that propose to develop new facilities or expand or modify existing facilities.11 A professional engineer must certify that a project to develop or expand a water system was completed in a manner consistent with regulatory requirements.12

The counties have developed standards for groundwater wells serving individual residences to make sure that a proposed use has a sufficient amount of water available and it meets water quality standards. Typically, these standards are reviewed when a project proponent seeks to subdivide land or build a residential structure.


Washington is one of 18 western states that adopted the prior appropriations doctrine as the legal framework for the regulation and use of water resources. Under the prior appropriations doctrine, the first claimant in time has priority over other claimants, provided the senior claimant puts the water to beneficial use. Senior rights also are protected from impairment by later claimants. A water right under Washington law is both a property right and a license to use the public waters of the State. Nevertheless, water rights that are not put to beneficial use for an extended period are subject to forfeiture. A water right is appurtenant to land on which water is beneficially used.13 Unless explicitly reserved, a water right passes to the grantee upon conveyance of appurtenant real property.

The Water Code of 191714 established a permit system as the exclusive method to appropriate surface water. The 1917 Act declared that, subject to prior existing rights, all surface waters are public resources. Surface water rights that predate the 1917 Water Code are not subject to permit requirements, but are subject to other provisions of the Water Code. The Groundwater Code of 194515 extended the 1917 Water Code’s permit requirements to subsurface or “groundwater” resources. Subsurface waters also were declared to be public resources and subject to appropriation and requirements for beneficial use.16 All uses of surface water and groundwater after enactment of the 1945 groundwater code require a permit or certificate, with the exception of groundwater for the following uses:

  • stockwatering;
  • watering a lawn or noncommercial garden not exceeding one-half acre;
  • single or group domestic in an amount not exceeding 5,000 gallons per day; or
  • industrial purposes in an amount not exceeding 5,000 gallons per day.17

Water uses from groundwater wells that fall under any of these categories are commonly referred to as “exempt wells” because they are exempt from the permitting requirements of the state water code. Although a groundwater withdrawal that meets the requirements of RCW 90.44.050 is exempt from permitting, it is still considered an appropriative water right. As explained earlier, the water code is based on the prior appropriation doctrine – the first in time, is the first in right. An exempt well user has a priority date based on the first step taken to put the water to beneficial use.


Over the past decade, as Ecology has adopted new administrative rules restricting the use of exempt wells and closing the basins for new groundwater withdrawals, Ecology has included provisions acknowledging that mitigation may be submitted to address the concern for impairment. In areas such as the Upper Kittitas County area of the Yakima River Basin, the Skagit River Basin, Walla Walla River Basin and Dungeness area, a project proponent has to mitigate for the new use of water even if the use is exempt from permitting under RCW 90.44.050. Each basin, and in some instances subbasins within the basin, have different impairment concerns. Consequently, in order to be able to establish a new use of water, mitigation must address the impacts of the proposed use.

Furthermore, in 2013, the Department of Ecology adopted a Water Resources Program Policy for Evaluating Mitigation Plans providing for its protocol for the entire state.18 The policy describes Ecology’s procedures for evaluating mitigation plans and the types of acceptable mitigation. Ecology explained that its mitigation policy is that “adverse effects to the state’s water resources are best mitigated in-kind, in-time and in-place.” Ecology also explained that, “[i]n certain situations, Ecology may accept mitigation that is out-of-kind, out-of-time, or out-of-place.”19


Ecology’s preference is for in-kind, in-place and in-time mitigation. Ecology defines “in-kind mitigation” as follows –offsetting the adverse effects of a new diversion or withdrawal with an equal quantity of suitable quality water, such as through retiring or placing into the Trust Water Rights Program an existing water right with consumptive quantity; discharging reclaimed water; through a stream augmentation scheme; or through cessation of a use.20

Mentor Law Group, PLLC • Seattle, Washington • (206) 838-7650 •

Ecology prefers for the mitigation to be “in-time” and “in-place”; meaning that the mitigation measures occur at the same location at the same time as the adverse effects of a proposal.

In the instance of the Upper Kittitas Groundwater Rule, Ecology was concerned that new groundwater users will impact existing water users and instream flows for fish and wildlife habitat. Ecology considers the Yakima River Basin to be over-appropriated; meaning that more water rights have been confirmed than water available. The surface flows of the Yakima River have been subject to a water right adjudication since 1977.21 Over the past two decades it has become clear that groundwater and surface water are connected in the Yakima River Basin. Although the adjudication court refused to join groundwater, the United State Court of Appeals for the Ninth Circuit recently held that groundwater can be enjoined if their use will impact the availability of surface water for senior water right holders. As the United States Court of Appeals for the Ninth Circuit explained – Surface water contributes to groundwater, and groundwater contributes to surface water. The reciprocal hydraulic connection between groundwater and surface water has been known to both the legal and professional communities for many years.22 In the 1990s, the Department of Ecology and the Yakama Indian Nation entered into a settlement agreement proscribing that Ecology would pay for a UnitedStates Geologic Survey Report considering the interactions between groundwater and surface water. The USGS report was released in 2011 and determined that groundwater withdrawals in the Yakima River reduced surface water flows by 194 cubic feet per second (cfs).23 To address the concern that new exempt wells are reducing surface flows in an already over-appropriated basin, the Department of Ecology adopted the Upper Kittitas Groundwater Rule. In the Rule, Ecology withdrew all unappropriated water within Upper Kittitas County, except:

-  new uses with a building permit, and in that case the project proponent had three years from the date the building permit was vested;

- new uses relying on a Group B public water system, and in that case the new use had to be established within five years of the first use of water by the Group B system; or

- new uses determined to be “water budget neutral”.24

A “water budget neutral” project is one that is mitigated by a source that sufficiently off-sets the consumptive impact of the new ground water use.25 In most parts of the Upper Kittitas area, mitigation for new uses is off-set by the non-use of senior water rights from so-called “water banks.” 23 D.M. Ely, M.P. Bachmann and J.J. Vaccaro, Numerical Simulation of Groundwater Flow for the Yakima River Basin Aquifer System, Washington Scientific Investigations

1. “Water Banks”

A so called “water bank” is an account of water in the State’s Trust Water Right Program that can be used to mitigate for state authorized new uses of water. In 1991, the Legislature established the Trust Water Right Program.26 The 1991 statute authorized the Department of Ecology to acquire water rights and to place them “in trust,” for any beneficial use, including instream flows, irrigation, or municipal purposes. Ecology may use the Trust Water Right Program for water banking purposes.27 Legislation enacted in 2003 established a pilot water banking program in the Yakima Basin explicitly tied to the water right transfer statute, RCW 90.03.380.28 If a water right holder seeks to have a water right managed for water banking purposes, that water right is transferred to the Trust Water Program. At the time of the transfer into Trust, the water right is subject to review under RCW 90.03.380 based on the foreseeable temporary or permanent uses for the water right. When those future water demands exist, the water right or a portion of the water right can be assigned to that new water user so long as the new use is consistent with the future use reviewed under RCW 90.03.380 at the time the water right was transferred to the Trust Water Program.

In order for a project proponent to rely on a water bank to provide mitigation for the intended new use of water, the new use must be sufficiently mitigated by the water right that was transferred into the State Trust Water Right Program that established the “water bank.” The first step to determine if the new use will be approved is to apply for a permit to appropriate water for a beneficial purpose or to request a determination of water budget neutrality (if the use is exempt from permitting under RCW 90.44.050).29 The applicant files a request to use a certain amount of water for a specific purpose, at a specific location. The applicant for a water right permit is required to publish notice of the application for two consecutive weeks in a newspaper of general circulation in the county in which the water is to be diverted.30 There is a 30-day comment period after publication. Any party alleging impairment can file a protest with Ecology after publication of public notice of the application for a new water right or a change of use of an existing water right. RCW 90.03.290 requires Ecology to make essentially four determinations prior to the issuance of a water use permit:

(1) what water, if any, is available;
(2) to what beneficial uses the water is to be applied;
(3) will the appropriation impair existing rights; and
(4) will the appropriation detrimentally affect the public welfare.31 In considering whether water is available and whether the proposed use will impact existing rights, Ecology will closely examine the attributes of the water right in the water bank that is proposed to mitigate the new use. Each senior water right transferred into the State Trust Water Right Program retains the attributes of its historic beneficial use for purposes of determining how it can be used to mitigate for new uses. For example, if a water right was historically used from the Yakima River, it may not be able to mitigate for certain tributaries because of impacts to existing users or fish and wildlife habitat.

In the Yakima River Basin, there are seven privately held water banks in operation.32 Each of those seven water banks has a “suitability map” based on the water rights attributes. In the Walla Walla Basin, the Walla Walla Water Exchange relies on senior water rights transferred into the State Trust Water Right Program to offset new uses. New water users pay a fee to the exchange to offset a certain amount of water for domestic and irrigation needs.33 Similarly, new water users in the Dungeness rely on its water exchange to offset use by senior water rights and aquifer recharge projects.34

2. Reclaimed Water

Reclaimed water, sometimes called recycled water, is former wastewater (sewage) that has been treated to remove solids and certain impurities, and then reused. Reclaimed water may be used for a variety of nonpotable water purposes including irrigation, agricultural uses, industrial and commercial uses, stream flow augmentation, dust control, fire suppression, surface percolation, and discharge into constructed wetlands. Depending on the new use, reclaimed water may be a source of water to mitigate for new groundwater withdrawals.

The Washington Department of Health (WDOH) issues permits for commercial or industrial uses of reclaimed water. The Department of Ecology (Ecology) issues reclaimed water permits for land applications of reclaimed water. Ecology and WDOH are required to adopt a single set of standards, procedures, and guidelines for industrial and commercial uses and land applications of reclaimed water. In 2009 the Legislature enacted SSB 5504. The bill required Ecology and WDOH to determine by rule which agency will act as the lead agency for purposes of the reclaimed water code. The lead agency must refer all permit applications to the non-lead agency for review and consultation.

Ecology may use permit fees for administration of the reclaimed water system permits. All plans, reports, and proposed methods of operation and maintenance must be approved by the lead agency before construction may begin. The lead agency must provide adequate public notice and opportunity for review and comment on all initial permit and renewal applications. The permitting decision is appealable in the manner established for the agency acting as the lead agency on that application.

The reclaimed water permit must include provisions that protect human health and the environment. The permit also must assure adequate and reliable treatment, and govern the water quality, location, rate, and purpose of use. A permit may only be issued to: (1) a municipal, quasi-municipal, or governmental entity; (2) a private utility; (3) the holder of a waste disposal permit; (4) the owner of an agricultural processing facility that is generating agricultural industrial process water for agricultural use; or (5) the owner of an industrial facility that is generating industrial process water for reuse. The State Plumbing Code allows for use of reclaimed water for nonpotable purposes, with requirements to use purple pipe and to clearly label installations. If the proposed use of reclaimed water is to augment or replace potable water supplies or to create the potential for the development of an additional new potable water supply, then regional water supply plans must consider the proposed use of the reclaimed water. Furthermore, reclaimed water will need to meet drinking water standards if discharged into a regional aquifer. Reclaimed water has been used for aquifer recharge and stream flow augmentation for large scale projects.

3. Rain Water

Rainwater is distinguished from other water sources because it is collected before entering a natural water body. Rainwater is regulated as stormwater, although often rooftop collection is treated differently than runoff from a land surface. Ecology does not require a permit for the “on-site storage and/or beneficial use of rooftop or guzzler collected rainwater . . . .”35 Ecology’s policy statement explains that – If and when the department determines that rooftop or guzzler rainwater harvesting systems are likely to negatively affect instream values or existing water rights, local restrictions may be set in place to govern subsequent new systems. To qualify as rooftop collected rainwater, the roof collecting the rainwater must be part of a fixed structure above the ground with a primary purpose other than the collection of rainwater for beneficial use. A guzzler is a devise used to catch and store rainwater to provide drinking water for wildlife, livestock or birds.

Stormwater cannot be put to beneficial use without a water right permit. A technique known as stream flow augmentation presents mitigation as an  alternative to beneficial use. One approach is to develop a stormwater pond on the property and control releases to mimic natural stream flow conditions. This approach may address the in-kind and in-time impacts of a project during the low flow period. This technique was approved by the Washington Supreme Court for the Third Runway at Seattle-Tacoma International Airport.36 This model is also being currently considered by Ecology in the Fisher Creek Subbasin of the Skagit River Basin, along with potential habitat improvements, to offset new groundwater uses.37


Ecology’s mitigation policy also recognizes that habitat restoration may provide adequate mitigation. Out–of-kind mitigation refers to mitigation measures that provide “non-water” improvements, such as habitat improvements, removal of fish barriers or other means.38 Out-of-kind mitigation may be a suitable method in instances where the impact of the new groundwater use is upstream of senior water rights or the ability to provide stream flow augmentation. For example, for a new single family residence in the headwaters of a stream, providing habitat restoration may necessarily off-set the impact. Mitigation measures may be undertaken by the project proponent or in certain areas the mitigation measures may be transferred to a third party through an in lieu fee program or other mitigation program.

An in-lieu fee program (ILF) collects funds from individuals who are required to mitigate for impacts of development. The funds are pooled from multiple individuals to create mitigation sites that satisfy the permittees’ required mitigation. An ILF program is set up as an agreement between a regulatory agency (state, federal or local) and a single sponsor, generally a public agency or non-profit organization. The ILF Program sells “credits” that offset the impact of an individual’s project. ILF programs have primarily been used to address wetland and fresh water impacts that require a Clean Water Act § 404 permit but are now being used for other types of environmental impacts. A federal rule adopted by the U.S. Army Corps of Engineers (“Corps”) proscribes the process for creating an ILF program to offset impacts for wetland and other freshwater filling.

The ILF program framework is now being used to address habitat impacts for marine ecosystem disturbance in Hood Canal, for freshwater impacts in King County and water flow impacts in Kittitas County. In Hood Canal, the Hood Canal Coordinating Council (HCCC) has an approved ILF Program.39 The HCCC ILF Program has sold credits to the United States Navy to address impacts to the marine and freshwater environment for wharf expansion at the Bangor Trident Submarine Base. In King County, the King County Department of Natural Resources and Parks manages an ILF Program that is being used to address habitat impacts from transportation improvement and utility expansion projects.40 In Kittitas County, the ILF model is being used in the Teanaway River of Kittitas County to address flow related impacts for new water users in a basin otherwise closed for new appropriations of water.


There are many different mitigation measures that can be considered for new projects in closed basins. It is important to fully understand the impacts of the project and the status of the natural resources that may be impacted. For example, if the basin is fully-appropriated such as the Yakima River Basin, an off-set of the consumptive use will be required. In basins with low-flow issues because of increased urbanization and impervious area, it may be possible to address the impact of new uses by retiming reclaimed or stormwater, or providing wetland enhancement to improve long term groundwater storage.

1 Chapter 173-539A WAC.

2 Chapter 173-503 WAC.

3 Chapter 173-532 WAC. Note: The rule applies to those in the gravel aquifers which are closely linked to surface water flows.

4 Chapter 173-518 WAC.

5 RCW 58.17.110(2) (Subdivision Act); RCW 19.27.097(1) (State Building Code); RCW 36.70A.030(12) (Growth Management Act). Kittitas County v E. Growth Mgmt. Hearings Bd., 172 Wn.2d 144, 178-79, 256 P.3d 1192, 1209 (2011).

6 42 U.S.C. § 300g-2.

7 RCW § 70.119A.020(4).

8 WAC 246-290-020.

9 WAC 246-291-010.

10 WAC 246-290-100(2).

11 WAC 246-290-110, -120.

12 WAC 246-290-120(5).

13 RCW 90.03.380.

14 Chapter 90.03 RCW.

15 Chapter 90.44 RCW.

16 RCW 90.44.040; The 1945 Groundwater Code established special rules for transfer or change of use of groundwater permits and certificates. See RCW 90.44.100.

17 RCW 90.44.050.

18 Wash. Dept. of Ecology, Water Resources Program, Evaluating Mitigation Plans, POL-2035 (Feb. 20, 2013), available online at:

19 Id. at 1.

20 Id. at 2.

21 Ecology v. Acquavella, Yakima County Superior Court Cause No. 77-2-01484-5.

22 United States v. Orr Water Ditch Co., 600 F.3d 1152, 1158 (9th Cir. 2010). Report 2011-5155 (2011).

24 WAC 173-539A-040.

25 WAC 173-539A-050.

26 Chapter 90.42 RCW.

27 RCW 90.42.100.

28 See generally Laws of 2003, Chapter 144.

29 RCW 90.03.250; RCW 90.44.050.

30 RCW 90.03.280.

31 Hillis v. Ecology, 131 Wn.2d 373, 384, 932 P.2d 139 (1997); Stempel v. Dept. of Water Resources, 82 Wn.2d 109, 115, 508 P.2d 166 (1973).

32 See Upper Kittitas Water Exchange, available online at:

33 Walla Walla Watershed Management Partnership, Mitigation Credits for Exempt Wells, available online at: listings/water-available/166-for-sale-exempt-well-mitigation-credits-throughoutwatershed.

34 Dungeness Water Exchange, managed by Washington Water Trust, information available online at:

35 Ecology Water Resources Program, Policy/Interpretive Statement Regarding Collection of Rainwater for Beneficial Use, POL-1017 (2009).

36 See Port of Seattle v. Pollution Control Hearings Bd., 151 Wn.2d 568, 616-17, 90 P.3d 659 (2004).

37 Dept. of Ecology, Fisher Creek Mitigation Project, information available online at:

38 Wash. Dept. of Ecology, Water Resources Program, Evaluating Mitigation Plans, POL-2035, pg. 3, (Feb. 20, 2013), available online at:

39 Hood Canal Coordinating Council, Hood Canal In-lieu Fee Program, information available online at:

40 King County, Mitigation Credit Program, information available online at:

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