CHAPTER 160
SENATE BILL No. 237
An Act relating to water; concerning water rights; enacting the Kansas water banking act;
relating to jurisdiction over certain matters; supplementing the Kansas water appropri-
ation act; providing civil penalties for certain violations of laws and orders, terms, con-
ditions and limitations relating thereto; providing for certain accounts for deposit of
certain water under a water right; providing for term permits for use of such water, less
a conservation element; relating to certain fees and charges; amending K.S.A. 82a-708a
and 82a-1030 and K.S.A. 2000 Supp. 65-171d and repealing the existing sections.

Be it enacted by the Legislature of the State of Kansas:

      New Section  1. (a) Sections 1 through 13, and amendments thereto,
may be cited as the Kansas water banking act.

      (b) Implementation of the provisions of the water banking act shall
be subject to the availability of appropriations for that purpose.

      New Sec.  2. As used in this act:

      (a) ``Bank boundary'' means the geographic area where a water bank
operates and conducts the functions of a water bank and may encompass
more than one hydrologic unit.

      (b) ``Bank charter'' means a document that sets out the articles of
incorporation and principal functions of a water bank.

      (c) ``Bankable water right'' means a water right that has been deter-
mined pursuant to section 4, and amendments thereto, to be bankable.

      (d) ``Chief engineer'' means the chief engineer of the division.

      (e) ``Conservation element'' means the portion of a deposit that is
taken out of use for the duration of the deposit and is not allowed to be
withdrawn and used by subsequent users.

      (f) ``Deposit,'' other than as used in ``safe deposit account,'' refers to
the deposit of a water right, or portion of a water right, in a water bank
for the purpose of having the bank lease water from such water right, or
portion of a water right, to another person or entity.

      (g) ``Division'' means the division of water resources of the Kansas
department of agriculture.

      (h) ``Hydrologic unit'' means a defined area from which water rights
authorizing diversion of water from a source of supply may be deposited
and from which water from the same source of supply may be leased, in
accordance with the provisions of this act, without causing impairment of
existing water rights or a significantly different hydrological effect to other
users of water from the same source or hydraulically connected sources
of supply.

      (i) ``Linked water rights'' means two or more water rights that au-
thorize common points of diversion or a common place of use, or both.

      (j) ``Safe deposit account'' means a personal account held in a water
bank where unused water from a bankable water right is placed for use
in future years.

      (k) ``Term permit'' means a permit to appropriate water for a speci-
fied period of time.

      (l) ``Water bank'' means a private not-for-profit corporation that: (1)
Leases water from water rights that have been deposited in the bank; and
(2) provides safe deposit accounts. A water bank may be a groundwater
bank or a surface water bank, or both.

      New Sec.  3. (a) A water bank shall be authorized to enter into con-
tracts with holders of water rights for deposit in the bank of all or a portion
of any water right from a hydrologic unit within the bank boundary, sub-
ject to the following:

      (1) The bank shall accept for deposit only a water right, or portion of
a water right, that has been determined to be a bankable water right under
section 4, and amendments thereto;

      (2) a deposit of a groundwater water right shall be for a period of not
more than five years;

      (3) a deposit shall be subject to such terms and conditions as provided
by the contract between the bank and the depositor, including penalty
provisions for breach of any contract conditions; and

      (4) a deposit shall be subject to such terms and conditions, and such
approval by the chief engineer, as provided by rules and regulations of
the chief engineer.

      (b) A water bank shall be authorized to lease water from any water
right, or portion of a water right, that has been deposited in the bank,
subject to the following:

      (1) Any water leased must be used within the bank boundary and in
the same hydrologic unit from which the water right authorizing diversion
of the water is deposited;

      (2) use of leased water shall be subject to all provisions of the Kansas
water appropriation act, including but not limited to all requirements
relating to term permits;

      (3) a lease shall be subject to such terms and conditions as provided
by the contract between the bank and the lessor, including penalty pro-
visions for breach of any contract conditions;

      (4) a lease shall be subject to such terms and conditions, and such
approval by the chief engineer, as provided by rules and regulations of
the chief engineer; and

      (5) a water bank's decision of whether or not to lease water shall not
be based on the proposed use of the water.

      (c) A water bank shall provide safe deposit accounts where a holder
of a water right may place unused water from the water right for future
withdrawal, subject to the following:

      (1) A water right holder shall place in a safe deposit account only
water from a water right that has been determined to be a bankable water
right under section 4 and amendments thereto;

      (2) only water that was unused in the immediate past calendar year
may be placed in a safe deposit account and the amount that shall be
placed in such account shall be less than the total amount of unused water
from the bankable water right in that year;

      (3) only water from one water right shall be placed in a safe deposit
account and water from a water right shall not be placed in more than
one safe deposit account, except that water from linked water rights may
be placed in a single safe deposit account;

      (4) each calendar year that water remains in a safe deposit account,
the amount of water held in the account shall decrease by a percentage
established by the charter of the bank but in no case less than 10% an-
nually of all amounts placed in the account;

      (5) the total amount of water accumulated in a safe deposit account
shall not exceed the maximum annual quantity authorized to be diverted
under the water right or the aggregate maximum quantity authorized to
be diverted under all linked water rights from which water is deposited
in the account;

      (6) use of water withdrawn from a safe deposit account shall be sub-
ject to all provisions of the Kansas water appropriation act, including but
not limited to all requirements relating to term permits;

      (7) a safe deposit account shall be subject to such terms and condi-
tions as provided by the contract between the bank and the account
holder, including penalty provisions for breach of any contract conditions;

      (8) a safe deposit account shall be subject to such terms and condi-
tions, and such approval by the chief engineer, as provided by rules and
regulations of the chief engineer; and

      (9) the operation of safe deposit accounts by the bank shall not result
in an increase in the amount of net consumptive use of water in any
hydrologic unit, computed on a long-term rolling average compared to a
representative past period.

      (d) A water bank may provide services to facilitate the sale or lease
of water rights.

      (e) A water bank shall not own, buy or sell water rights.

      New Sec.  4. Before a water right or portion of a water right shall be
accepted for deposit in a water bank or water from a water right shall be
placed in a safe deposit account, the bank, with the assistance of the
division, shall determine whether the water right is bankable, as follows:
(a) The right is vested or has been issued a certificate of appropriation;
and (b) the right has not been abandoned and is in good standing, based
on past water usage and compliance with the terms of the holder's permit
and all applicable provisions of law and orders of the chief engineer.

      New Sec.  5. (a) Before a water bank is authorized to operate in the
state, the bank's charter must be approved by the chief engineer. Prior
to approval, the body wishing to charter the bank shall submit to the chief
engineer the proposed bank charter and any other information required
by rules and regulations of the chief engineer to determine whether the
bank shall be chartered to operate in the state.

      (b) The chief engineer shall approve the charter of a water bank only
if the chief engineer determines that:

      (1) The charter ensures that the operations and policies of the bank
will be consistent with the provisions of this act, the state water plan and
all applicable statutes, rules and regulations, findings and orders of the
chief engineer, groundwater management district policies and water as-
surance district operations plans;

      (2) there is sufficient participation by water right holders and water
users to make the operations of the bank practical and feasible;

      (3) the governing body of the bank has at least five members and is
reasonably representative of public and private interests in water within
the bank boundary;

      (4) the bank would not lease or accept for placement in a safe deposit
account water from the same hydrologic unit as another chartered bank
or accept for deposit a water right that authorizes diversion of water from
the same hydrologic unit as another chartered water bank;

      (5) the charter ensures that, for each calendar year, the aggregate
amount of all bank deposits (determined by multiplying the amount of
each water right deposited by the length of time of the deposit and then
adding together the resulting amounts for all deposits) will equal or ex-
ceed the sum of the aggregate amount of water leased by the bank (de-
termined by multiplying the amount of each lease by the length of time
of the lease and then adding together the resulting amounts for all leases)
plus the aggregate conservation element of all leases (determined by mul-
tiplying the conservation element of each lease by the length of the lease
and then adding together the resulting amounts for all leases);

      (6) the charter ensures that the operations of the bank will not result
in impairment of existing water rights or an increase in depletion of se-
verely depleted groundwater aquifers or stream courses;

      (7) the charter ensures that the operations of the bank will result in
a savings of 10% or more in the total amount of groundwater consumed
for a representative past period pursuant to water rights deposited in the
bank, excluding groundwater located in an intensive groundwater use
control area where corrective control provisions have reduced the allo-
cation of groundwater to less than the quantity previously authorized by
water rights in the area;

      (8) the charter provides a procedure for resolution of complaints by
bank participants and others impacted by the bank policies, practices and
operations;

      (9) the charter ensures that the determination of the portion of a
water right that is bankable shall be subject to the following:

      (A) The determination shall be primarily based on a representative
period of average water consumption for the hydrologic unit from which
water is authorized to be diverted under the water right; and

      (B) the method of determination shall not penalize past implemen-
tation of water conservation practices;

      (10) the charter ensures that the total amount of groundwater leased
each year from each hydrologic unit does not exceed 90% of the historic
average annual amount collectively diverted pursuant to all deposited wa-
ter rights or portions of water rights from such unit for a representative
past period; and

      (11) the charter provides a procedure for the dissolution of the bank,
specifically stating how the remaining deposits and safe deposit accounts
will be distributed.

      (c) Prior to July 1, 2002, not more than one water bank shall be
chartered to operate in the state. Such water bank shall be a groundwater
bank. On or after July 1, 2002, one additional water bank may be char-
tered to operate in the state. Such water bank shall be a surface water
bank or a surface water and groundwater bank.

      (d) A water bank shall be chartered for a period of not more than
seven years, at which time the bank shall be subject to review in accord-
ance with section 7, and amendments thereto, to determine whether the
bank's charter shall be extended.

      (e) Any amendment to the charter of a water bank must be approved
by the chief engineer prior to adoption of the amendment.

      New Sec.  6. (a) On or before February 10 of each year, each water
bank shall submit to the chief engineer a report containing the following:

      (1) With regard to water rights or portions of water rights on deposit
in the bank during the last year: (A) The total quantity of water authorized
to be diverted annually pursuant to each such water right or portion of a
water right; (B) the total quantity of water used, by purpose of use, and
acres irrigated for the portion authorized to be used for irrigation, during
the last year as a result of leases of such water rights or portions of water
rights; and (C) the total quantity of water used, by purpose of use, and
acres irrigated for the portion authorized for irrigation pursuant to such
water rights or portions of water rights during the two years preceding
the last year; and

      (2) with regard to water in each safe deposit account in the bank: (A)
An accounting of the total quantity of water placed in such accounts dur-
ing the past year and a balance at year end; (B) the total quantity of water
used during the past year, and acres irrigated if an irrigation water right,
from the account; (C) the total quantity of water authorized to be diverted
annually, the quantity actually used and the acres irrigated, if an irrigation
water right, during the past year pursuant to the water rights or linked
water rights related to such account; and (D) the total quantity of water
used and acres irrigated pursuant to such water rights during the two
years preceding the last year.

      (b) The chief engineer may require owners of water rights deposited
in a water bank, owners of water rights that have placed water in safety
deposit accounts in a water bank and persons leasing water from a water
bank to file annual water use reports at a date earlier than that provided
by K.S.A. 82a-732, and amendments thereto.

      (c) The report required by this section shall be in the form prescribed
by the chief engineer.

      New Sec.  7. (a) Not later than five years after the establishment of
a water bank, the director of the Kansas water office shall convene a team
to evaluate the operation of the bank. The team shall consist of:

      (1) The director of the Kansas water office, or the director's designee,
who shall serve as chairperson of the team;

      (2) the director of the Kansas geological survey, or the director's des-
ignee;

      (3) two members who represent water right holders and water users
who have used the bank's services, which members shall be selected by
the governing body of the bank;

      (4) members selected by the chief engineer as follows: (A) Two mem-
bers engaged in teaching or research at institutions of postsecondary ed-
ucation in subjects involving water resources, including but not limited
to water resources engineering and hydrology; (B) a member who is an
economist with knowledge and experience in water resources; (C) one
member having knowledge and experience in water law; and (D) two
members having knowledge and experience in water policy issues and
residing outside the bank boundary, who shall represent the public in-
terest;

      (5) one representative of each groundwater management district lo-
cated in whole or in part within the bank boundary selected by the board
of directors of such district; and

      (6) one representative of each water assurance district located in
whole or in part within the bank boundary selected by the board of di-
rectors of such district.

      (b) The staff of the Kansas water office shall provide staff assistance
to the evaluation team.

      (c) Not more than one year after a team is convened pursuant to this
section, the team shall submit a report of its evaluation and recommen-
dations to the governor, the Kansas water office, the Kansas water au-
thority, the secretary of agriculture, the chief engineer and the senate
standing committee on natural resources and the house standing com-
mittee on environment, or the successors to such committees regarding:

      (1) The operations and policies of the bank and whether they are
consistent with the provisions of this act, the state water plan and all
applicable statutes, rules and regulations, findings and orders of the chief
engineer, groundwater management district policies and water assurance
district operations plans;

      (2) whether the operations of the bank are achieving the goals and
objectives of water banking as set out in the state water plan and whether
changes could be made to further those goals and objectives;

      (3) whether the charter of the bank should be extended;

      (4) the terms under which the bank's charter should be allowed to
lapse, if the team recommends that the charter not be extended;

      (5) the bank's impact on the entire area of all hydrologic units any
parts of which are encompassed in the bank's boundary; and

      (6) any other matters that the team determines relevant to the future
of water banking in the state.

      (d) Unless otherwise provided by law, the chief engineer, in accord-
ance with the recommendations of the team, may extend the charter of
the bank for an additional period not to exceed seven years or may allow
the bank charter to lapse under the terms recommended by the team.

      New Sec.  8. Depositing a water right in a water bank or placement
of water in a safe deposit account in a water bank shall constitute due
and sufficient cause pursuant to K.S.A. 82a-718, and amendments
thereto, for failure to use water for a lawful, beneficial use for the term
of the deposit or the placement.

      New Sec.  9. The chief engineer may adopt rules and regulations to
administer and enforce the provisions of this act.

      New Sec.  10. (a) In addition to any other provision of this act or the
Kansas water appropriation act, and subject to the provisions of subsec-
tion (b), the chief engineer may suspend the use of water under a term
permit, an approved application for a permit to appropriate water for
beneficial use, an appropriation right or a vested right, acquired pursuant
to the provisions of the Kansas water appropriation act, for the failure to
comply with the provisions of this act. The suspension may be for a de-
fined period in a subsequent calendar year or years but does not include
or prevent the enforcement of the terms, conditions and limitations of a
water right or permit during the current year of use.

      (b) The chief engineer shall suspend the use of water under a permit
or water right pursuant to subsection (a) only upon notice and hearing in
accordance with the provisions of the Kansas administrative procedure
act.

      (c) Orders of the chief engineer issued pursuant to this section are
subject to review in accordance with the provisions of K.S.A. 2000 Supp.
82a-1901, and amendments thereto.

      New Sec.  11. Each water bank shall pay all costs incurred by the
division and by the Kansas water office for assistance and services pro-
vided pursuant to this act, including, but not limited to, costs for person-
nel necessary to provide such assistance and services.

      New Sec.  12. (a) There is hereby created in the state treasury the
water resources cost fund. The chief engineer shall remit to the state
treasurer in accordance with the provisions of K.S.A. 75-4215, and
amendments thereto, all moneys received by the division to reimburse
costs as required by section 11, and amendments thereto. Upon receipt,
the state treasurer shall deposit the entire amount in the state treasury
and credit it to the water resources cost fund.

      (b) Moneys in the water resources cost fund shall be expended only
for the division's costs of providing assistance and services as provided by
this act.

      (c) On or before the 10th of each month, the director of accounts
and reports shall transfer from the state general fund to the water re-
sources cost fund interest earnings based on:

      (1) The average daily balance of moneys in the water resources cost
fund for the preceding month; and

      (2) the net earnings rate for the pooled money investment portfolio
for the preceding month.

      (d) All expenditures from the water resources cost fund shall be made
in accordance with appropriation acts upon warrants of the director of
accounts and reports issued pursuant to vouchers approved by the chief
engineer for the purposes set forth in this section.

      New Sec.  13. (a) There is hereby created in the state treasury the
water office cost fund. The director of the Kansas water office shall remit
to the state treasurer in accordance with the provisions of K.S.A. 75-4215,
and amendments thereto, all moneys received by the water office to re-
imburse costs as required by section 11, and amendments thereto. Upon
receipt, the state treasurer shall deposit the entire amount in the state
treasury and credit it to the water office cost fund.

      (b) Moneys in the water office cost fund shall be expended only for
the Kansas water office's costs of providing assistance and services as
provided by this act.

      (c) On or before the 10th of each month, the director of accounts
and reports shall transfer from the state general fund to the water office
cost fund interest earnings based on:

      (1) The average daily balance of moneys in the water office cost fund
for the preceding month; and

      (2) the net earnings rate for the pooled money investment portfolio
for the preceding month.

      (d) All expenditures from the water office cost fund shall be made in
accordance with appropriation acts upon warrants of the director of ac-
counts and reports issued pursuant to vouchers approved by the director
of the Kansas water office for the purposes set forth in this section.

      New Sec.  14. (a) As used in this section:

      (1) ``Chief engineer'' means the chief engineer of the division of water
resources of the department of agriculture.

      (2) ``Secretary'' means the secretary of agriculture.

      (b) Any person who commits any of the following may incur a civil
penalty as provided by this section:

      (1) Any violation of the Kansas water appropriation act (K.S.A. 82a-
701 et seq., and amendments thereto) or any rule and regulation adopted
thereunder;

      (2) any violation of an order issued pursuant to K.S.A. 82a-1038, and
amendments thereto, relating to an intensive groundwater use control
area; or

      (3) any violation of a term, condition or limitation imposed by the
chief engineer as authorized by law, including, but not limited to: (A)
Diversion of water from an unauthorized point of diversion; (B) failure
to limit the use of water to the authorized place of use; (C) failure to
submit or comply with the terms of conservation plans as required pur-
suant to K.S.A. 82a-733, and amendments thereto; (D) failure to comply
with the maximum annual quantity or rate of diversion authorized; (E)
failure to properly install, maintain or assure the accuracy of acceptable
water measurement devices; (F) failure to comply with orders related to
minimum desirable stream flow, unlawful diversion, impairment of senior
water rights or waste of water; or (G) failure to limit the use of water to
an authorized type of use.

      (c) The amount of the civil penalty provided for by this section shall
be not less than $100 nor more than $1,000 per violation. In the case of
a continuing violation, each day such violation continues may be deemed
a separate violation. Such civil penalty may be assessed in addition to any
other penalty provided by law.

      (d) The chief engineer or the chief engineer's duly authorized agent,
upon a finding that a person has committed a violation specified in sub-
section (b), may order the modification or suspension of the person's
water right or use of water, in addition to any other penalty provided by
law.

      (e) No civil penalty or suspension or modification of a water right or
use of water shall be imposed pursuant to this section except on the
written order of the chief engineer or duly authorized agent of the chief
engineer. Such order shall state the nature of the violation, the factual
basis for the finding, the penalty to be imposed and the appropriate pro-
cedure for appeal of the order to the chief engineer or the secretary, as
established by K.S.A. 2000 Supp. 82a-1901, and amendments thereto.
Upon review, the order shall be affirmed, reversed or modified and the
reasons therefor shall be specified.

      (f) Any person aggrieved by an order of the chief engineer, or the
chief engineer's duly authorized agent, pursuant to this section may re-
quest review by the secretary as provided by K.S.A. 2000 Supp. 82a-1901,
and amendments thereto, and, upon exhaustion of administrative reme-
dies, may appeal to the district court in the manner provided by the act
for judicial review and civil enforcement of agency actions.

      (g) The provisions of this section shall be part of and supplemental
to the Kansas water appropriation act.

      Sec.  15. K.S.A. 2000 Supp. 65-171d is hereby amended to read as
follows: 65-171d. (a) For the purpose of preventing surface and subsur-
face water pollution and soil pollution detrimental to public health or to
the plant, animal and aquatic life of the state, and to protect beneficial
designated uses of the waters of the state and to require the treatment of
sewage predicated upon technologically based effluent limitations, the
secretary of health and environment shall make such rules and regula-
tions, including registration of potential sources of pollution, as may in
the secretary's judgment be necessary to: (1) Protect the soil and waters
of the state from pollution resulting from underground storage reservoirs
of hydrocarbons and liquid petroleum gas; (2) control the disposal, dis-
charge or escape of sewage as defined in K.S.A. 65-164 and amendments
thereto, by or from municipalities, corporations, companies, institutions,
state agencies, federal agencies or individuals and any plants, works or
facilities owned or operated, or both, by them; and (3) establish water
quality standards for the waters of the state to protect their beneficial
designated uses. In no event shall the secretary's authority be interpreted
to include authority over the beneficial use of water, water quantity al-
locations, protection against water use impairment of a beneficial use, or
any other function or authority under the jurisdiction of the Kansas water
appropriation act, K.S.A. 82a-701, and amendments thereto.

      (b) The secretary of health and environment may adopt by reference
any regulation relating to water quality and effluent standards promul-
gated by the federal government pursuant to the provisions of the federal
clean water act and amendments thereto, as in effect on January 1, 1989,
which the secretary is otherwise authorized by law to adopt.

      (c) For the purposes of this act, including K.S.A. 65-161 through 65-
171h and K.S.A. 2000 Supp. 65-1,178 through 65-1,198, and amendments
thereto, and rules and regulations adopted pursuant thereto:

      (1) ``Pollution'' means: (A) Such contamination or other alteration of
the physical, chemical or biological properties of any waters of the state
as will or is likely to create a nuisance or render such waters harmful,
detrimental or injurious to public health, safety or welfare, or to the plant,
animal or aquatic life of the state or to other designated beneficial uses;
or (B) such discharge as will or is likely to exceed state effluent standards
predicated upon technologically based effluent limitations.

      (2) ``Confined feeding facility'' means any lot, pen, pool or pond: (A)
Which is used for the confined feeding of animals or fowl for food, fur
or pleasure purposes; (B) which is not normally used for raising crops;
and (C) in which no vegetation intended for animal food is growing.

      (3) ``Animal unit'' means a unit of measurement calculated by adding
the following numbers: The number of beef cattle weighing more than
700 pounds multiplied by 1.0; plus the number of cattle weighing less
than 700 pounds multiplied by 0.5; plus the number of mature dairy cattle
multiplied by 1.4; plus the number of swine weighing more than 55
pounds multiplied by 0.4; plus the number of swine weighing 55 pounds
or less multiplied by 0.1; plus the number of sheep or lambs multiplied
by 0.1; plus the number of horses multiplied by 2.0; plus the number of
turkeys multiplied by 0.018; plus the number of laying hens or broilers,
if the facility has continuous overflow watering, multiplied by 0.01; plus
the number of laying hens or broilers, if the facility has a liquid manure
system, multiplied by 0.033; plus the number of ducks multiplied by 0.2.
However, each head of cattle will be counted as one full animal unit for
the purpose of determining the need for a federal permit. ``Animal unit''
also includes the number of swine weighing 55 pounds or less multiplied
by 0.1 for the purpose of determining applicable requirements for new
construction of a confined feeding facility for which a permit or registra-
tion has not been issued before January 1, 1998, and for which an appli-
cation for a permit or registration and plans have not been filed with the
secretary of health and environment before January 1, 1998, or for the
purpose of determining applicable requirements for expansion of such
facility. However, each head of swine weighing 55 pounds or less shall be
counted as 0.0 animal unit for the purpose of determining the need for
a federal permit.

      (4) ``Animal unit capacity'' means the maximum number of animal
units which a confined feeding facility is designed to accommodate at any
one time.

      (5) ``Habitable structure'' means any of the following structures which
is occupied or maintained in a condition which may be occupied and
which, in the case of a confined feeding facility for swine, is owned by a
person other than the operator of such facility: A dwelling, church, school,
adult care home, medical care facility, child care facility, library, com-
munity center, public building, office building or licensed food service or
lodging establishment.

      (6) ``Wildlife refuge'' means Cheyenne Bottoms wildlife management
area, Cheyenne Bottoms preserve and Flint Hills, Quivera, Marais des
Cygnes and Kirwin national wildlife refuges.

      (d) In adopting rules and regulations, the secretary of health and en-
vironment, taking into account the varying conditions that are probable
for each source of sewage and its possible place of disposal, discharge or
escape, may provide for varying the control measures required in each
case to those the secretary finds to be necessary to prevent pollution. If
a freshwater reservoir or farm pond is privately owned and where com-
plete ownership of land bordering the reservoir or pond is under common
private ownership, such freshwater reservoir or farm pond shall be ex-
empt from water quality standards except as it relates to water discharge
or seepage from the reservoir or pond to waters of the state, either surface
or groundwater, or as it relates to the public health of persons using the
reservoir or pond or waters therefrom.

      (e)  (1) Whenever the secretary of health and environment or the
secretary's duly authorized agents find that the soil or waters of the state
are not being protected from pollution resulting from underground stor-
age reservoirs of hydrocarbons and liquid petroleum gas or that storage
or disposal of salt water not regulated by the state corporation commission
or refuse in any surface pond is causing or is likely to cause pollution of
soil or waters of the state, the secretary or the secretary's duly authorized
agents shall issue an order prohibiting such underground storage reservoir
or surface pond. Any person aggrieved by such order may within 15 days
of service of the order request in writing a hearing on the order.

      (2) Upon receipt of a timely request, a hearing shall be conducted in
accordance with the provisions of the Kansas administrative procedure
act.

      (3) Any action of the secretary pursuant to this subsection is subject
to review in accordance with the act for judicial review and civil enforce-
ment of agency actions.

      (f) The secretary may adopt rules and regulations establishing fees
for the following services:

      (1) Plan approval, monitoring and inspecting underground or buried
petroleum products storage tanks, for which the annual fee shall not ex-
ceed $5 for each tank in place;

      (2) permitting, monitoring and inspecting salt solution mining oper-
ators, for which the annual fee shall not exceed $1,950 per company; and

      (3) permitting, monitoring and inspecting hydrocarbon storage wells
and well systems, for which the annual fee shall not exceed $1,875 per
company.

      (g) Prior to any new construction of a confined feeding facility with
an animal unit capacity of 300 to 999, such facility shall register with the
secretary of health and environment. Facilities with a capacity of less than
300 animal units may register with the secretary. Any such registration
shall be accompanied by a $25 fee. Within 30 days of receipt of such
registration, the department of health and environment shall identify any
significant water pollution potential or separation distance violations pur-
suant to subsection (h). If there is identified a significant water pollution
potential, such facility shall be required to obtain a permit from the sec-
retary. If there is no water pollution potential posed by a facility with an
animal unit capacity of less than 300, the secretary may certify that no
permit is required. If there is no water pollution potential nor any viola-
tion of separation distances posed by a facility with an animal unit capacity
of 300 to 999, the secretary shall certify that no permit is required and
that there are no certification conditions pertaining to separation dis-
tances. If a separation distance violation is identified, the secretary may
reduce the separation distance in accordance with subsection (i) and shall
certify any such reduction of separation distances.

      (h)  (1) Any new construction or new expansion of a confined feeding
facility, other than a confined feeding facility for swine, shall meet or
exceed the following requirements in separation distances from any hab-
itable structure in existence when the application for a permit is submit-
ted:

      (A) 1,320 feet for facilities with an animal unit capacity of 300 to 999;
and

      (B) 4,000 feet for facilities with an animal unit capacity of 1,000 or
more.

      (2) A confined feeding facility for swine shall meet or exceed the
following requirements in separation distances from any habitable struc-
ture or city, county, state or federal park in existence when the application
for a permit is submitted:

      (A) 1,320 feet for facilities with an animal unit capacity of 300 to 999;

      (B) 4,000 feet for facilities with an animal unit capacity of 1,000 to
3,724;

      (C) 4,000 feet for expansion of existing facilities to an animal unit
capacity of 3,725 or more if such expansion is within the perimeter from
which separation distances are determined pursuant to subsection (k) for
the existing facility; and

      (D) 5,000 feet for: (i) Construction of new facilities with an animal
unit capacity of 3,725 or more; or (ii) expansion of existing facilities to an
animal unit capacity of 3,725 or more if such expansion extends outside
the perimeter from which separation distances are determined pursuant
to subsection (k) for the existing facility.

      (3) Any construction of new confined feeding facilities for swine shall
meet or exceed the following requirements in separation distances from
any wildlife refuge:

      (A) 10,000 feet for facilities with an animal unit capacity of 1,000 to
3,724; and

      (B) 16,000 feet for facilities with an animal unit capacity of 3,725 or
more.

      (i)  (1) The separation distance requirements of subsections (h)(1)
and (2) shall not apply if the applicant for a permit obtains a written
agreement from all owners of habitable structures which are within the
separation distance stating such owners are aware of the construction or
expansion and have no objections to such construction or expansion. The
written agreement shall be filed in the register of deeds office of the
county in which the habitable structure is located.

      (2)  (A) The secretary may reduce the separation distance require-
ments of subsection (h)(1) if: (i) No substantial objection from owners of
habitable structures within the separation distance is received in response
to public notice; or (ii) the board of county commissioners of the county
where the confined feeding facility is located submits a written request
seeking a reduction of separation distances.

      (B) The secretary may reduce the separation distance requirements
of subsection (h)(2)(A) or (B) if: (i) No substantial objection from owners
of habitable structures within the separation distance is received in re-
sponse to notice given in accordance with subsection (l); (ii) the board of
county commissioners of the county where the confined feeding facility
is located submits a written request seeking a reduction of separation
distances; or (iii) the secretary determines that technology exists that
meets or exceeds the effect of the required separation distance and the
facility will be using such technology.

      (C) The secretary may reduce the separation distance requirements
of subsection (h)(2)(C) or (D) if: (i) No substantial objection from owners
of habitable structures within the separation distance is received in re-
sponse to notice given in accordance with subsection (l); or (ii) the sec-
retary determines that technology exists that meets or exceeds the effect
of the required separation distance and the facility will be using such
technology.

      (j)  (1) The separation distances required pursuant to subsection
(h)(1) shall not apply to:

      (A) Confined feeding facilities which were permitted or certified by
the secretary on July 1, 1994;

      (B) confined feeding facilities which existed on July 1, 1994, and reg-
istered with the secretary before July 1, 1996; or

      (C) expansion of a confined feeding facility, including any expansion
for which an application was pending on July 1, 1994, if: (i) In the case
of a facility with an animal unit capacity of 1,000 or more prior to July 1,
1994, the expansion is located at a distance not less than the distance
between the facility and the nearest habitable structure prior to the ex-
pansion; or (ii) in the case of a facility with an animal unit capacity of less
than 1,000 prior to July 1, 1994, the expansion is located at a distance not
less than the distance between the facility and the nearest habitable struc-
ture prior to the expansion and the animal unit capacity of the facility
after expansion does not exceed 2,000.

      (2) The separation distances required pursuant to subsections
(h)(2)(A) and (B) shall not apply to:

      (A) Confined feeding facilities for swine which were permitted or
certified by the secretary on July 1, 1994;

      (B) confined feeding facilities for swine which existed on July 1, 1994,
and registered with the secretary before July 1, 1996; or

      (C) expansion of a confined feeding facility which existed on July 1,
1994, if: (i) In the case of a facility with an animal unit capacity of 1,000
or more prior to July 1, 1994, the expansion is located at a distance not
less than the distance between the facility and the nearest habitable struc-
ture prior to the expansion; or (ii) in the case of a facility with an animal
unit capacity of less than 1,000 prior to July 1, 1994, the expansion is
located at a distance not less than the distance between the facility and
the nearest habitable structure prior to the expansion and the animal unit
capacity of the facility after expansion does not exceed 2,000.

      (3) The separation distances required pursuant to subsections
(h)(2)(C) and (D) and (h)(3) shall not apply to the following, as deter-
mined in accordance with subsections (a), (e) and (f) of K.S.A. 2000 Supp.
65-1,178 and amendments thereto:

      (A) Expansion of an existing confined feeding facility for swine if an
application for such expansion has been received by the department be-
fore March 1, 1998; and

      (B) construction of a new confined feeding facility for swine if an
application for such facility has been received by the department before
March 1, 1998.

      (k) The separation distances required by this section for confined
feeding facilities for swine shall be determined from the exterior perim-
eter of any buildings utilized for housing swine, any lots containing swine,
any swine waste retention lagoons or ponds or other manure or waste-
water storage structures and any additional areas designated by the ap-
plicant for future expansion. Such separation distances shall not apply to
offices, dwellings and feed production facilities of a confined feeding fa-
cility for swine.

      (l) The applicant shall give the notice required by subsections
(i)(2)(B) and (C) by certified mail, return receipt requested, to all owners
of habitable structures within the separation distance. The applicant shall
submit to the department evidence, satisfactory to the department, that
such notice has been given.

      (m) All plans and specifications submitted to the department for new
construction or new expansion of confined feeding facilities may be, but
are not required to be, prepared by a professional engineer or a consult-
ant, as approved by the department. Before approval by the department,
any consultant preparing such plans and specifications shall submit to the
department evidence, satisfactory to the department, of adequate general
commercial liability insurance coverage.

      New Sec.  16. (a) As used in this section:

      (1) ``Base average usage'' means: (A) The average amount of water
actually used for a beneficial use under a groundwater water right during
calendar years 1996 through 2000, excluding any amount used in any such
year in excess of the amount authorized by such water right; or (B) if the
holder of a groundwater water right shows to the satisfaction of the chief
engineer that the holder has implemented significant water conservation
measures during calendar years 1996 through 2000, the average amount
of water actually used for a beneficial use under such right during the
five calendar years immediately before the calendar year when such meas-
ures were implemented, excluding any amount used in any such year in
excess of the amount authorized by such water right.

      (2) ``Chief engineer'' means the chief engineer of the division of water
resources of the department of agriculture.

      (b) Any holder of a groundwater water right which has not been de-
posited or placed in a safe deposit account in a chartered water bank may
establish a flex account where the holder may deposit, in advance, water
from such water right for any five consecutive calendar years, subject to
the following:

      (1) The water right must be vested or shall have been issued a cer-
tificate of appropriation;

      (2) the withdrawal of water pursuant to the water right shall be prop-
erly and adequately metered;

      (3) the water right shall not have been abandoned and shall be in
good standing, based on past water usage and compliance with the terms
of the holder's permit and all applicable provisions of law and orders of
the chief engineer; and

      (4) the amount of water that shall be deposited in the account shall
be 90% of the amount of the holder's base average usage times five.

      (c) The chief engineer shall implement a program providing for the
issuance of term permits to holders of groundwater water rights who have
established flex accounts in accordance with this section. Such term per-
mits shall authorize the use of water in a flex account at any time during
the five consecutive calendar years for which the application for the term
permit is made, without annual limits on such use. Application for any
such term permit shall be filed not later than October 10, of the year
preceding the first year for which the application is made.

      (d)  Term permits provided for by this section shall be subject to the
following:

      (1) A separate term permit shall be required for each point of diver-
sion.

      (2) The quantity of water authorized for diversion shall be limited to
the amount deposited pursuant to subsection (b)(4).

      (3) The authorized place of use for the term permit shall not be
greater than that authorized by the existing groundwater right.

      (4) The chief engineer may establish, by rules and regulations, criteria
for such term permits when the water right authorizes multiple points of
diversion or multiple water rights authorize a single point of diversion or
overlapping places of use.

      (5) Except as explicitly provided for by this section, such term permits
shall be subject to all provisions of the Kansas water appropriation act,
and rules and regulations adopted under such act, and nothing in this
section shall authorize impairment of any vested right or prior appropri-
ation right by the exercise of such term permit.

      (e) All costs of administration of this section shall be paid from fees
for term permits provided for by this section. Any appropriation or trans-
fer from any fund other than the water appropriation certification fund
for the purpose of paying such costs shall be repaid to the fund from
which such appropriation or transfer is made. At the time of repayment,
the secretary of agriculture shall certify to the director of accounts and
reports the amount to be repaid and the fund to be repaid. Upon receipt
of such certification, the director of accounts and reports shall promptly
transfer the amount certified to the specified fund.

      (f) The chief engineer shall submit a written report on the imple-
mentation of this section to the house standing committee on environ-
ment and the senate standing committee on natural resources on or be-
fore February 1 of each year.

      (g) This section shall be part of and supplemental to the Kansas water
appropriation act.

      Sec.  17. K.S.A. 82a-708a is hereby amended to read as follows: 82a-
708a. (a) Any person may apply for a permit to appropriate water to a
beneficial use, notwithstanding that the application pertains to the use of
water by another, or upon or in connection with the lands of another.
Any rights to the beneficial use of water perfected under such application
shall attach to the lands on or in connection with which the water is used
and shall remain subject to the control of the owners of the lands as in
other cases provided by law.

      (b) Except as otherwise provided in subsections (d) and (e), (e) and
(f), each application for a permit to appropriate water, except applications
for permits for domestic use, shall be accompanied by an application fee
fixed by this section for the appropriate category of acre feet in accord-
ance with the following:

Acre Feet                                                                                                   Fee

0 to 100 $100
101 to 320 $150
More than 320 $150 + $10
for each additional 100
acre feet or any part thereof
      (c) Except as otherwise provided in subsections (d) and (e), (e) and
(f), each application for a permit to appropriate water for storage, except
applications for permits for domestic use, shall be accompanied by an
application fee fixed by this section for the appropriate category of stor-
age-acre feet in accordance with the following:

Storage-Acre Feet                                                                                   Fee

0 to 250 $100
More than 250 $100 + $10
for each additional 250
storage-acre feet or any part thereof
      (d) Each application for a term permit pursuant to section 16, and
amendments thereto, shall be accompanied by an application fee estab-
lished by rules and regulations of the chief engineer in an amount not to
exceed $400 for the five-year period covered by the permit.

      (e) For any application for a permit to appropriate water, except ap-
plications for permits for domestic use, which proposes to appropriate by
both direct flow and storage, the fee charged shall be the fee under sub-
section (b) or subsection (c), whichever is larger, but not both fees.

      (e) (f) Each application for a permit to appropriate water for water
power or dewatering purposes shall be accompanied by an application
fee of $100 plus $200 for each 100 cubic feet per second, or part thereof,
of the diversion rate requested in the application for the proposed project.

      (f) (g) All fees collected by the chief engineer pursuant to this section
shall be remitted to the state treasurer as provided in K.S.A. 82a-731 and
amendments thereto.

      Sec.  18. K.S.A. 82a-1030 is hereby amended to read as follows: 82a-
1030. (a) In order to finance the operations of the district, the board may
assess an annual water user charge against every person who withdraws
groundwater from within the boundaries of the district. The board shall
base such charge upon the amount of groundwater allocated for such
person's use pursuant to his or her such person's water right. Such charge
shall not exceed sixty cents (60¢ ) $.60 for each acre-foot (325,851 gallons)
of groundwater withdrawn within the district or allocated by the water
right, except that the annual user charge for the fiscal year of the district
beginning on or after July 1, 2001, and before July 1, 2002, may be in an
amount not exceeding $.65. Whenever a person shows by the submission
to the board of a verified claim and any supportive data which may be
required by the board that his or her such person's actual annual ground-
water withdrawal is in a lesser amount than that allocated by the water
right of such person, the board shall assess such annual charge against
such person on the amount of water shown to be withdrawn by the ver-
ified claim. Any such claim shall be submitted by April 1 of the year in
which such annual charge is to be assessed. The board may also make an
annual assessment against each landowner of not to exceed five cents (5¢ )
$.05 for each acre of land owned within the boundaries of the district.
Special assessments may also be levied, as provided hereafter, against land
specially benefited by a capital improvement without regard to the limits
prescribed above.

      (b) Before any assessment is made, or user charge imposed, the board
shall submit the proposed budget for the ensuing year to the eligible
voters of the district at a hearing called for that purpose by one (1) pub-
lication in a newspaper or newspapers of general circulation within the
district at least twenty-eight (28) 28 days prior to the meeting. Following
the hearing, the board shall, by resolution, adopt either the proposed
budget or a modified budget and determine the amount of land assess-
ment or user charge, or both, needed to support such budget.

      (c) Both the user charges assessed for groundwater withdrawn and
the assessments against lands within the district shall be certified to the
proper county clerks and collected the same as other taxes in accordance
with K.S.A. 79-1801, and acts amendatory thereof or supplemental
thereto, and the amount thereof shall attach to the real property involved
as a lien in accordance with K.S.A. 79-1804, and acts amendatory thereof
or supplemental thereto. All moneys so collected shall be remitted by the
county treasurer to the treasurer of the groundwater management district
who shall deposit them to the credit of the general fund of the district.
The accounts of each groundwater management district shall be audited
annually by a public accountant or certified public accountant.

      (d) Subsequent to the certification of approval of the organization of
a district by the secretary of state and the election of a board of directors
for such district, such board shall be authorized to issue no-fund warrants
in amounts sufficient to meet the operating expenses of the district until
money therefor becomes available pursuant to user charges or assess-
ments under subsection (a). In no case shall the amount of any such
issuance be in excess of twenty percent (20%) 20% of the total amount
of money receivable from assessments which could be levied in any one
year as provided in subsection (a). No such warrants shall be issued until
a resolution authorizing the same shall have been adopted by the board
and published once in a newspaper having a general circulation in each
county within the boundaries of the district. Whereupon such warrants
may be issued unless a petition in opposition to the same, signed by not
less than ten percent (10%) 10% of the eligible voters of such district and
in no case by less than twenty (20) 20 of the eligible voters of such district,
is filed with the county clerk of each of the counties in such district within
ten (10) 10 days following such publication. In the event such a petition
is filed, it shall be the duty of the board of such district to submit the
question to the eligible voters at an election called for such purpose. Such
election shall be noticed and conducted as provided by K.S.A. 82a-1031,
and amendments thereto.

      Whenever no-fund warrants are issued under the authority of this sub-
section, the board of directors of such district shall make an assessment
each year for three (3) years in approximately equal installments for the
purpose of paying such warrants and the interest thereon. All such as-
sessments shall be in addition to all other assessments authorized or lim-
ited by law. Such warrants shall be issued, registered, redeemed and bear
interest in the manner and in the form prescribed by K.S.A. 79-2940, and
amendments thereto, except they shall not bear the notation required by
said statute and may be issued without the approval of the state board of
tax appeals. Any surplus existing after the redemption of such warrants
shall be handled in the manner prescribed by K.S.A. 79-2940, and amend-
ments thereto.

 Sec.  19. K.S.A. 82a-708a and 82a-1030 and K.S.A. 2000 Supp. 65-
171d are hereby repealed.
 Sec.  20. This act shall take effect and be in force from and after its
publication in the statute book.

Approved May 9, 2001.
__________