State Attorney General Backs Agency Decision to Prohibit New Wells in Eastern Washington County

As a general rule, anybody who wants to use underground water (“groundwater”) in Washington must receive a permit from the Department of Ecology (“Ecology”). Since the end of World War II, however, groundwater wells using less than 5,000 gallons of water per day for domestic use have been exempt from Washington’s permit requirement. As a result of rapid growth and recent droughts, permit-exempt well use is an increasing source of conflict and Ecology has received requests to limit or prohibit exempt wells, particularly in dry Eastern Washington. On July 31, 2009, Ecology adopted an emergency rule closing all new groundwater withdrawals in Upper Kittitas County, the area of the state with the most contentious groundwater exempt well issues. The Washington Attorney General’s Office has now issued a formal opinion (“AGO”) concurring that Ecology has authority to prohibit new groundwater withdrawals when it does not know enough about water availability, but determining that Ecology does not have authority to alter the numeric limits or water amounts exempted from a permit.[1] If Washington wants to take a more gradual approach to limiting permit-exempt well use, then the state legislature will need to amend Washington’s groundwater exemptions. Absent such an amendment, developers, property owners, and others planning to use permit-exempt wells in Washington should note the potential for Ecology to prohibit such groundwater withdrawals where there are concerns that they may impair other users’ water rights or may not be sustainable but there is not enough information for Ecology to determine whether adequate water is available.

Kittitas County Water Shortages

The Yakima Basin in central Washington is one of the state’s most water-short areas. Water supply in the Yakima River Basin is limited and Ecology has not issued any new groundwater permits in the Yakima River Basin since 1993.[2] Exempt wells were, accordingly, the only method available for obtaining new appropriation of groundwater in the Basin. Under Washington’s “first in time, first in right” system, water rights associated with the Yakama Reclamation Project with 1905 priority dates were curtailed during droughts in 2001 and 2005. Western portions of Kittitas County are experiencing rapid growth and this growth is largely served by permit-exempt wells that may negatively affect the flow of the Yakima River or its tributaries.

The Attorney General’s Office recently issued AGO 2009 No. 6 in response to requests by Ecology and Kittitas County. Ecology and Kittitas County had entered into a Memorandum of Agreement (“MOA”) describing interim measures for addressing potential groundwater shortages and cooperatively manage exempt groundwater wells until more is known about the aquifers and water supplies in northern Kittitas County.[3] The MOA established interim and long term management measures and called for development of a comprehensive groundwater study and a permanent groundwater management rule. To implement that agreement, Ecology adopted WAC 173-539A as an emergency rule.[4] An administrative rule adopted on an emergency basis is valid for only 120 days, and expires at the end of that period.[5] When the first set of rules expired, Ecology adopted a second set of emergency rules on the same subject, also denominated as WAC 173-539A.[6] When those rules, in turn, expired at the end of 120 days, Ecology adopted a third version of WAC 173-539A, also as an emergency rule.[7] Like the first two versions, the third version of WAC 173-539A restricted, but did not prohibit, the use of water from new exempt withdrawals for residential purposes.[8]

On July 16, 2009, Ecology adopted a fourth version of WAC 173-539A, which was dramatically different than the prior three.[9] Ecology filed the fourth version after negotiations failed to gain a commitment from the Kittitas County Board of Commissioners on a groundwater management agreement that would have limited permit exempt wells in Upper Kittitas. Finally, on July 31, 2009, Ecology adopted a fifth version of WAC 173-539A. Rather than continuing to authorize new exempt withdrawals under certain restrictions, as provided in the first three versions of WAC 173-539A, the fourth and fifth versions of the emergency rule withdraw the groundwater of the basin from new appropriation and set forth a moratorium against new exempt withdrawals within the Upper Kittitas for the duration of the emergency rule. “No new appropriation or withdrawal of groundwater shall be allowed, including those exempt from permitting .…”[10] The current version of the rule provides an exception to the prohibition against new uses for “water budget neutral projects” using a “trust water right program to offset the consumptive use associated with the proposed new use of groundwater.”[11] Like the earlier versions, however, the fifth version of WAC 173-539A is also an emergency rule, and Ecology continues to consider permanent options.

The temporary, emergency rule Ecology enacted on July 31, 2009, closing upper Kittitas County to new groundwater withdrawals will be in place for a maximum of 120 days.[12] Those with vested building permit applications or issued building permits as of July 16, 2009, will not be subject to the groundwater closure and may use permit-exempt wells. During the 120 days, new groundwater uses proposed by those without vested building permits will be allowed only if the proposed use of water is fully mitigated to offset impacts to senior water rights and streamflows. Mitigation can generally be achieved by acquiring and transferring or retiring another existing water right from the same water source to offset a new use.

Legislative History of the Groundwater Permit Exemptions

Currently permit-exempt wells are legally used across the state to serve single homes, small developments, irrigation of small lawns and gardens, industry, and stock watering. Washington’s groundwater permit exemptions are codified in RCW 90.44.050, the same statute providing that permits are required for groundwater withdrawals unless exempt. Persons qualifying under such exemptions and withdrawing water “regularly used beneficially, shall be entitled to a right equal to that established by a permit used under the provisions of this chapter.”[13]

In 1917, the Washington Legislature enacted a Water Code requiring a permit system for the appropriation of water.[14] In 1945, the Legislature enacted a comprehensive groundwater code to regulate and control allocation of public groundwater (as distinguished from surface water governed under the 1917 Water Code).[15] The 1945 Ground Water Code is expressly supplemental to the 1917 Water Code.[16] If water is located underground it is unambiguously classified as groundwater for purposes of the 1945 Ground Water Code.[17] The Code requires a permit from the Department of Ecology (“Ecology”) to withdraw groundwater unless the withdrawal is subject to a permit exemption.[18]

The exemptions in RCW 90.44.050 have remained substantively unchanged from the time they were originally enacted in 1945.[19] Thus, while the general rule is that groundwater cannot be withdrawn from any aquifer without an Ecology issued permit, the Legislature provided the following four classes of exemption under the groundwater right permit system:

(1) stockwatering purposes;
(2) watering a lawn or noncommercial garden not exceeding one-half acre in area;
(3) single or group domestic uses not exceeding five thousand gallons a day; and
(4) industrial uses not exceeding five thousand gallons a day.

Recognizing that in some circumstances small withdrawals might affect the water system, the Legislature authorized Ecology to “require the person or agency making any such small withdrawal to furnish information as to the means for and the quality of that withdrawal.”[20] The proviso is evidence that the Legislature tried to carefully avoid letting the exemptions conflict with the state’s need for information to operate the water system and resolve disputes.

While “small withdrawals” are exempt from procedural requirements to obtain water right permits, they are not exempt from other substantive provisions in the groundwater code. Specifically, such exemptions must comply with the beneficial use requirement, are supplemental to surface water rights, and are subject to the priority system.[21]

The question arises, however, as to what tools or authority Ecology has to define the groundwater exemptions or otherwise withdraw and close a groundwater resource from further withdrawals. That issue is presently playing itself out in Kittitas County, where, in September 2007, members of an organization called Aqua Permanente filed a petition for Ecology to enact a rule under “RCW 90.54.050(2) that withdraws all unappropriated groundwater resources of Kittitas County until adequate information on quantities and sustainability of withdrawals is available.” Ecology denied the petition and instead agreed with Kittitas County to a series of interim measures, short of withdrawing the basin from all new water appropriations.[22] On January 7, 2009, Ecology filed notice for a proposed rule that would implement exempt well management measures identified in the MOA between Ecology and Kittitas County. The rule is serving as a test of Ecology’s existing authority to address the impacts of water use under the groundwater permit exemptions.

The debate about groundwater permit exemptions has been building for several decades. The Attorney General’s Office has opined, in Attorney General’s Opinion (“AGO”) 1997 No. 6, that under the rules of statutory construction, the “exemption” language in the Groundwater Code should be narrowly construed.[23] The Attorney General’s Office’ opinion is that if the Legislature had included the drilling of multiple exempt wells within the code’s exemptions, it “would undercut the unity and integrity of the state’s water system and could increase the complexity of any litigation or other dispute about the water in question.”[24]

Although permit-exempt groundwater withdrawals don’t require a water right permit, to the extent the groundwater is beneficially used, the water user withdrawing groundwater under the exemption establishes a water right that enjoys the same privileges as a water right permit or certificate obtained directly from Ecology. For example, an existing permit exempt groundwater right may not be impaired by a junior withdrawal.[25]

The “Domestic Well” Exemption

The “domestic well” exemption provides a groundwater permit exemption for any withdrawal of public groundwater for single or group domestic uses in an amount not exceeding five thousand gallons a day.[26] This exemption has been the most consistently controversial of the four groundwater permitting exemptions and, as a result, has received the greatest scrutiny.

As it has become more difficult to receive a water permit because of delay in processing applications and the good possibility that applications will be denied because of lack of water supply, developers have used the groundwater exemption to provide water for their projects. The use of the exemption for larger projects has raised many issues related to the interpretation of the groundwater exemption and concerns that the exemption itself is allowing for the use of water that will impact other existing rights and instream flow resources. The primary references for guidance on applying this exemption are AGO 1997 No. 6 and the Court of Appeals decision in Campbell & Gwinn, each further discussed in detail below.

AGO 1997 No. 6

In an attempt to resolve some of the issues arising under the domestic well exemption, the Departments of Health and Ecology requested a formal AGO. Following is a summary of the findings in AGO 1997 No. 6:

• Where a property owner wishes to develop land and supply the development with domestic water from several wells, and each well will pump less than 5,000 gallons per day but all the wells together will pump more than 5,000 gallons per day, the “project” is a single withdrawal of ground water and is not exempt from the permit requirements of chapters 90.44 and 90.03 RCW.[27]
• There is no statutory provision for intertying, under RCW 90.03.383, water systems deriving from ground water withdrawals which were exempt from permitting pursuant to RCW 90.44.050; the intertie statute could be applied if the exempt withdrawals applied for a permit, or were consolidated[28] with another water right with a permit or certificate.[29]
• If the owner of a water right derived from an exempt ground water withdrawal applies for a permit for the withdrawal under RCW 90.44.050, Ecology would apply the four-element test contained in RCW 90.030.290 in deciding whether to grant a permit.[30]
• There is no statutory or other lawful basis for issuing a water right certificate to the holder of a water right based on an exempt ground water withdrawal, unless either (1) the owner of the right applies for and receives a permit or (2) the exempt right is first consolidated with a right covered by a permit or certificate.[31]

While the amount of water withdrawn from exempt wells remains difficult to quantify, it is clear that the cumulative impact will affect ground water supply.[32] Thus, the domestic exempt well provision has become an issue in land use planning at the local level. Under Washington’s Growth Management Act (“GMA”), local governments cannot approve a subdivision proposal unless appropriate provisions have been made for potable water supplies.[33] Furthermore, a local government cannot issue a building permit unless and until it finds there is an adequate water supply necessary for the building’s intended use.[34]

AGO 1997 No. 6 did not, however, address whether the domestic well exemption would apply to a new subdivision proposal connected to an older land development.[35] If a “project” requires greater than 5,000 gallons of water per day, a permit is required. While the Opinion did not define the scope of a “project”, it did refer to case law developed under Washington State Environmental Policy Act (“SEPA”) and to legislative intent to conclude that the impact of a proposal as a whole should be considered in determining whether the domestic withdrawal exemption was appropriate in a given case, and that a project that was unified in purpose should not be broken down into separate components for instance, considering each well constituting a separate project.[36] The Opinion also recognized that it was responding to a specific fact pattern, and if the facts varied, “such as withdrawals independently made by different persons, or a series of separate withdrawals occurring over a long period of time, the answer might well be different”.[37]

Ecology v. Campbell and Gwinn

AGO 1997 No. 6 was challenged in the case of Ecology v. Campbell and Gwinn, L.L.C.[38] That case arose out Campbell and Gwinn’s (C&G) purchase and proposed development of 20 vacant lots. Because the development had no existing water rights and new water rights were not available because of lack of water supply, C&G began developing the lots under the theory that one to two lots can be served by a well that withdraws water under the domestic groundwater permit exemption. Each well would not exceed the 5,000 gallon per day limitation of the exemption. Ecology, in reviewing the well logs as they were filed by the well driller, informed C&G that under AGO 1997 No. 6 the permit exception did not apply to the 20-lot development because it was one “project” that in total would exceed the 5,000 gallons per day. Ecology and C&G agreed to file a declaratory action before the superior court seeking resolution.

In March 2002, the State Supreme Court issued an opinion, essentially confirming the analysis in AGO 1997 No. 6. The court stated that the plain reading of the statutory exemption is derived from “all that the legislature has said in the statute and related statutes which disclose the legislative intent about the provision in question.”[39] It is not a groundwater “well” exemption, but rather an exemption from a permit for a particular use regardless of the number of wells, and a developer may not claim multiple exemptions based upon drilling multiple wells.[40] The developer must obtain a water right permit from the Department of Ecology.

The court in Campbell and Gwinn did distinguish an individual lot owner’s ability to use the exemption from that of a developer, stating that while a developer may not claim multiple exemptions for homeowners, the individual homeowners may, independent of the development, seek to use water under the domestic groundwater permit exemption.[41] The court also recognized that the permit exemption is being used to circumvent a permit process because of the backlog of applications made obtaining new permits to appropriate water within a reasonable time virtually impossible.[42] Regardless, the court said this is an issue with the lack of funding by the legislature and does not change the law regarding the exemption.[43]

The Campbell and Gwinn decision helped define when the permit exemption applies and therefore when a person needs to obtain a water permit from the Department of Ecology. While Ecology can regulated existing water use including those that were created under the groundwater exemption to protect senior water rights from impairment,[44] Ecology has no specific authority to deny individuals on a case-by-case basis the right to commence water use under the exemption or rely on the exemption for subdivision approval.[45]

AGO 2005 No. 17

AGO 2005 No. 17 analyzed the stockwatering exemption. The “stockwatering” exemption provides a groundwater permit exemption for any withdrawal of public groundwater for stock-watering purposes. Unlike the other groundwater permit exemptions this one does not contain any express limits on water quantity or area of use. AGO 2005 No. 17 concluded that RCW 90.44.050 authorizes groundwater withdrawals for stock-watering purposes without a water right permit and does not limit the amount of such withdrawals to any specific quantity.[46] It further concluded that Ecology lacks statutory authority to require a permit as a condition to the withdrawal of groundwater for stock-watering purposes, or to categorically limit the amount of water that may be withdrawn for such purposes.[47]

However, the Opinion further noted that in certain circumstances statutes administered by Ecology would authorize it to affect or limit withdrawals of water for stock-watering purposes, just as they would authorize Ecology to affect or limit other exempt and nonexempt withdrawals.[48] For example, in Postema v. Pollution Control Hearings Bd.,[49] the Supreme Court held that where Ecology has closed water bodies to new withdrawals, it may prohibit new withdrawals that “will have any effect on the flow or level of the surface water.” Such a new withdrawal might be a new withdrawal for stock-watering or it might be a new withdrawal for some other purpose.

The issues in Postema arose from water right applications denied by Ecology pursuant to basin rules promulgated under RCW 90.54.050. AGO 2005 No. 17 suggests this same authority is a basis for Ecology to prohibit groundwater withdrawals under the exemption. As a second example, consistent with principles of prior appropriation, Ecology has authority under RCW 90.44.130 “to limit withdrawals by appropriators of ground water so as to enforce the maintenance of a safe sustaining yield from the ground water body.”[50]

Kim v. Pollution Control Hearing Board

In Kim v. Pollution Control Hearing Board,[51] the Washington Court of Appeals analyzed the industrial well exemption and issued an opinion that impacts all of the groundwater permit exemptions. The “industrial well” exemption in RCW 90.44.050 provides a groundwater permit exemption for any withdrawal of public groundwater for an industrial purpose in an amount not exceeding five thousand gallons a day. Thus, like the domestic well exemption, the industrial well exemption places a quantitative ceiling on withdrawals.

The Kims owned real property in Poulsbo, Washington that they used for both their home and their business, a commercial nursery. The nursery's components were a greenhouse, a display area of less than a half acre, and parking spaces for eight cars. The property was served by a well that was drilled in about 1965. The Kims took groundwater from the well for both their residence and the nursery. They used between 100 and 300 gallons per day “to directly water (via hand watering and watering wand) the plants that they raise and offer for sale to the general public.” They did not have a permit to take water from the well. Ecology ordered the Kims to stop using well water for their commercial nursery unless they applied for and obtained a permit but did not order them to stop using well water for their residence.

The Kims appealed Ecology’s order to the Pollution Control Hearings Board (PCHB). The PCHB affirmed, reasoning in part that it should interpret RCW 90.44.050 not in light of the intent of the 1945 legislature, but rather in light of “current scientific understanding of ground and surface water continuity, the federal mandates to protect endangered salmon, and the increasing demand for water to serve our growing population and economy.”[52] The Kims appealed from the PCHB to the superior court, but that court also affirmed. The Kims then appealed to the Washington Court of Appeals, Division II, which reversed the PCHB.

On appeal, Ecology asserted (1) that “the word ‘industry’ excludes agriculture”; (2) that “to interpret the ‘industrial purpose’ exemption to apply to irrigation would render meaningless the exemption for noncommercial gardens less than one half acre in size”; and (3) that to define “industrial purposes to include horticulture or agriculture would increase the types of uses to which the exemption applies, thus undermining the general rule that withdrawals must be permitted.”[53] The Court of Appeals rejected all three of Ecology’s arguments and held that when the Kims take groundwater for their commercial nursery, they are taking such water for an “industrial purpose,” and, therefore, are within that industrial well groundwater permit exemption.[54]

In reaching its decision, the Court of Appeals reversed the PCHB’s decision that an administrative agency can alter the plain meaning of a statute to meet changing societal conditions.[55] On this point, the court emphasized that if the groundwater permit exemptions in RCW 90.44.050 are no longer consistent with modern water needs then the statute must be amended by the legislature, not Ecology or the PCHB.[56]

Transfer/Change of Exempt Wells

Although appellate courts have not considered the issue, the Attorney General has concluded that, as a general matter, the owner of a well exempt from permitting has no right to transfer or change such rights.[57] Thus, the owner of an exempt well apparently may not transfer or change the withdrawal of water to a different location or for a different purpose, such as changing the use of the water from domestic-home use to industrial; an exempt withdrawal is strictly limited to the land to which the water was applied unless (a) the owner of the rights applies for and receives a permit or (b) the exempt rights is first consolidated with a right covered by a permit or certificate.[58] This conclusion appears, however, to be inconsistent with the statutory language in RCW 90.44.050 providing that “to the extent that it is used beneficially,” a permit-exempt use “shall be entitled to a right equal to that established by a permit issued under the provisions of this chapter” [i.e. the Groundwater Code]. Under RCW 90.44.100, a groundwater permit or certificate can be amended to authorize a change in point of withdrawal, manner of use, and/or place of use without loss of priority. It would be unequal to deny those same opportunities to a permit-exempt groundwater use and, therefore, the AGO opinion on this issue may be incorrect.

AGO 2009 No. 6

AGO 2009 No. 6, issued on September 21, 2009, is the Attorney General’s Office’ most recent foray into the groundwater permit-exempt well issue. The AGO concludes that “RCW 90.54.050(2) gives Ecology the authority to withdraw waters from availability for further appropriation, and not the authority to modify the statutory provisions addressing exempt withdrawals set forth by the Legislature in RCW 90.44.050.”[59] The AGO also concludes, however, that “RCW 90.54.050(2) does not give Ecology the authority to reduce groundwater use by whatever means it determines; rather, the statute provides to Ecology the authority to withdraw groundwater from appropriation.”[60] AGO 2009 No. 6 further concludes that at the same time Ecology has withdrawn groundwater in an area entirely from appropriation, it may also issue permits for new water rights or authorize new exempt withdrawals where the new appropriations are “water budget neutral” because the amount of water used is offset by mitigation from trust water rights.[61] Trust water rights can be exercised only if Ecology determines that “no existing water rights, junior or senior in priority, will be impaired[.]”[62]

Finally, AGO 2009 No. 6 declined to address whether state law assigning Ecology authority to regulate water rights and exempting certain withdrawals from the permitting process preempts counties from using their police powers under the GMA or other authorities to impose limits on water usage. The Attorney General’s Office declined to reach that issue because it is raised in a case currently pending before the Washington Court of Appeals on review of a decision of the Growth Management Hearings Board of Eastern Washington.[63] The Board, in that case, found that the GMA provides counties with the authority and the responsibility to protect the quantity and quality of water, and that failure to do so by allowing exempt wells violates the GMA.[64]

Conclusion

Under AGO 2009 No. 6, Ecology has authority to stop permit-exempt wells as it examines water availability but it does not have flexibility to limit the amount of water withdrawn without a permit. Under the AGOs and cases discussed above, it is now well established that the Washington Legislature would need to make any significant changes needed or desired to the groundwater permit exemption laws. The Legislature has repeatedly examined the exemptions in the fifty-four years since they were enacted in 1945 but has, to date, not amended those exemptions.
For more information on permit exempt wells and water resource issues generally, please contact Jeff Kray at Marten Law Group.