Duane Dormaier's longtime dream has been to expand his small, spring-fed orchard north of Yakima. But he needs more water. A lot more.

Dormaier, 73, purchased the 200-acre property more than 30 years ago. For much of that time, he has been waiting for the state to process his application for a new well so he can irrigate crops he's been experimenting with and build a home. Right now, he only waters three to five acres.

"I need water for what I'm doing up there," the Yakima resident said. "It's definitely holding me up to be able to improve that land and put it into production."

The wait for Dormaier and hundreds of others like him may soon be over, because the state Department of Ecology is about to begin processing applications for new, permitted wells.

But it's hardly a return to business-as-usual in the world of water, and many may not like what they are about to hear.

Now armed with a sophisticated model that can show how pumping from new wells across the Yakima River Basin will affect surface water, the Ecology Department is working toward a policy to govern the allocation of water resources for new uses.

As a result, a new era is dawning in the Yakima River Basin. It boils down to this: New wells will not be allowed to steal from surface water -- the rivers and streams legitimately claimed by fish and farmers for more than 100 years.

What's more, anyone relying on water obtained after 1905 is at risk of having their access cut off during a drought.

The fine print for this new era of water has not yet been written, but the problem is clearer than ever.

An 11-year study of groundwater by the U.S. Geological Survey shows that well-pumping is drawing water away from surface water, unfairly shorting those who rightfully have the first claim.

The agency also has developed a complex model that can tell how much impact a new groundwater use has on surface water. Ecology plans to use the USGS model to make decisions on 900 pending requests for new wells -- including Dormaier's.

For more than four decades, Ecology routinely granted permits for new wells, mostly for irrigation, while failing to consider the impact on surface water.

Applications stacked up for a variety of reasons through the late 1980s. The Yakama Nation began to challenge permits granted in the early 1990s, prompting a halt to the processing and stalling would-be irrigators like Dormaier.

Now the time has come, Ecology says, to confront the issue.

"We haven't had to come to grips with that because we have been water rich. We have created this oasis. We have gotten spoiled," observed Tom Tebb, regional director for Ecology in Yakima. "Those days are over."

One pot of water

The new approach will manage surface and groundwater as one pot of water. And that water will become more of a valuable commodity instead of something taken for granted.

Even wells for homes -- exempt by law from state permitting and the engine for much of the rural development in the Yakima Valley -- ultimately may be affected by the new approach, certainly during water-short years.

State lawmakers crafted the exemption during a different era, at the end of World War II, when small family farms were the standard. But today, those exempt wells continue to use water destined for surface flows, affecting users who have held the right to that water for more than a century.

Until and unless new water storage is built -- a long-term solution -- the imbalance of supply and demand in the Yakima River Basin raises for Yakima County the specter of Ecology's unilateral decision to impose a moratorium on new wells in upper Kittitas County, where rampant development began to have a negative effect on water for fish and farmers.

Ecology insists there are no plans for a moratorium for Yakima County.

Tebb, in a presentation in May to the Central Washington Home Builders Association, said his agency has no plans to unilaterally close portions of the basin to new wells.

State Rep. Bruce Chandler, R-Granger, said the department has some hurdles to overcome to implement the new era. The agency, he noted, is regarded with considerable suspicion in some quarters.

"I think the reality is it is Ecology's responsibility to first of all develop meaningful solutions and build support for them," he said. "Simply saying people have to turn off their water and cap their wells is not a solution."

But some fear severe restrictions on new wells or outright closures could come through another avenue. For example, environmental groups could petition the agency to stop groundwater depletion.

Or another drought -- when farmers face water cutbacks and demand their rights be protected -- could push Ecology to act.

"That (a drought) will provide the stimulus for the state or others to do everything that has occurred in Upper Kittitas County," said Jeff Slothower, an Ellensburg attorney who represents the Kittitas Reclamation District and who has been involved in water sales transactions. "Once that occurs, the solution will be water banks."

Banking water would allow new users to show Ecology they can offset their impacts through what is known as mitigation. The new user, for example, would buy portions of an existing right to surface water.

Mitigation along with a water marketing system -- a marketplace for buying and selling water to support new uses -- are likely to become the vehicles for growth and economic development.

"The whole future is in reallocation of existing rights," said Charles Roe, an Olympia attorney and retired longtime assistant state attorney general who has worked on water issues for years. "And establishing new rights are going to be either nonexistent or certainly rare at best."

Roe speaks from experience. He filed the basin water rights adjudication case in 1977 after a drought scare in which old tensions resurfaced about the ownership of water among irrigation districts in the sprawling Yakima Irrigation Project.

That case, finally in its late stages after 34 years, provides certainty about the priority and amount of all claims to surface water.

Some see a potential for a similar adjudication over groundwater, although no one wants another expensive legal marathon.

"We hope to have a better strategy than going to court for 20 years and seeing who wins and who loses," observed Bob Barwin, who deals with water policy issues in Ecology's Central Region office in Yakima.

Tebb concedes that much is still up in the air. Ecology, he said, is trying to chart a course that surprises no one, yet meets the end goal of managing water in the fairest and most prudent manner possible.

That course will need to involve all stakeholders -- tribal, irrigator and county interests -- sitting together to agree on a cooperative way forward and avoid any court fights.

"We are trying to keep the plates spinning as we put shape and form to what the future of water management will look like," Tebb said. "We've seen glimpses of it with the water banks. They will be the vehicle where water can be moved in the basin more effectively."

Ecology is meeting with Yakima County commissioners to fill in the land-use piece of water management.

Commissioner Mike Leita points out that unlike Kittitas County, Yakima followed a Supreme Court decision that capped the total amount of water available for a housing development at no more than 5,000 gallons per day, the state-authorized limit for exempt wells to serve homes.

"We understand there is a water problem that will not go away and will continue to grow," Leita said. "We don't want any surprises. We want to be a partner in the water destiny of our county."

Tebb said taking no action is not an option.

"Our responsibility is to manage the resource responsibly. To do nothing and look the other way and say there is no problem when the basin is saying there is a problem, is hypocrisy," Tebb said.

A new kind of bank

The most active water banks have been in upper Kittitas County, out of necessity.

Anyone seeking to build a new housing subdivision or even a single home, for example, must offset the impact of new domestic wells. One way of doing so, or mitigating, is to purchase water from a water bank.

Since water banks first opened in February 2010, more than 1,360 connections have been approved under the mitigation program for Kittitas County. The vast majority -- nearly 1,200 -- are for Northland Resources, a developer that obtained senior water rights to supply its own projects, known as Sapphire Skies.

The rest of the connections were enabled by Suncadia. The mountain resort was required to obtain water rights to offset growth surrounding the 6,400-acre development. Now it's reselling them for as much as 10 times the original cost. Prices vary depending on whether the applicant wants outside watering, but start at about $7,000 for more than a 10th of an acre-foot, including legal work to obtain approval for mitigation.

In addition to the Suncadia water bank, the upper county has banks in the Swauk basin and the Teanaway basin, east of Cle Elum.

Water banks are also popping up outside the moratorium area because of a belief that Ecology likely will require mitigation for new developments in the rest of the basin.

One who shares that belief is Ellensburg area builder and developer Mitch Williams.

"I am poised in my own business model to expect that to happen. I won't leave that to chance," said Williams, who has been building in Kittitas County since 1989. "I won't buy any ground I'm not prepared to mitigate if groundwater withdrawal is part of the planned land use."

Williams has launched his own water bank with about 90 acre-feet of water, a portion of the water rights he obtained when he purchased property on Manastash Creek, southwest of Ellensburg.

Some of the water he will use for his own housing developments and some he will offer for sale.

He already has had inquiries from large agricultural interests seeking a more assured supply of water.

"I see these players moving in early to solve their problem," he added.

Kittitas County Commissioner Paul Jewell, who is taking the lead for his county in talks with Ecology and other interests to resolve the moratorium, said Kittitas has been unfairly singled out for regulatory action when the vast majority of water use is in the lower counties. He said he believes mitigation is inevitable in Yakima and Benton counties.

"To think that some sort of program or imposition applied in Upper Kittitas County won't be applied to the rest of the Yakima River Basin is naive," he said. "No doubt at some point it will happen."

But mitigation and buying from water banks is likely to be greeted with skepticism. Dormaier, the retired hobby farmer who's been waiting for a permit to drill for decades, doesn't see how his proposed use would seriously damage the overall water supply.

"I'm moving it, using it and putting it back," said the retired fire investigator and engineer. "I may delay the process a little bit. But it's still going back into the soil. It's not being wasted."

The evidence is in

But now there is hard evidence that sticking a new straw in the ground sucks water from somewhere -- and someone -- else.

Set for final release late this summer, the groundbreaking USGS water study concluded that pumping from Union Gap north intercepts about 115 cubic feet per second -- water that would have reached the Yakima River at Parker, south of Union Gap. The estimate is based on conditions in effect in 2001. About 6,000 new water wells have been drilled since then.

Parker is a key control point because a 1994 federal law requires the Bureau of Reclamation to provide a minimum of 300 cubic feet per second in low-water years. In those years, the minimum flow requirement comes from storage in the basin's five reservoirs. In exchange for the flow target, project irrigators obtained access to federal funds to make their delivery systems more efficient.

In Tebb's view, well pumping has created a deficit that must be eliminated to avoid affecting senior rights and stream flows. After all, he points out, the law protects the fishing rights of the Yakama Nation and the Bureau of Reclamation's irrigation rights.

For their part, the Yakamas have warned Ecology that the nation will use "any and all remedies available to it" to protect its recognized senior water right, according to correspondence to the agency.

Another aggrieved party is the "proratable" irrigators within the bureau-operated Yakima Irrigation Project, who pay for construction, operation and maintenance of the reservoir system.

In the parlance of water, the districts that pay storage costs are the "proratables" whose rights are reduced during a drought to satisfy more senior users.

Ron Van Gundy, retired manager and now a consultant to the Roza Irrigation District, calls eliminating the draw on surface water by rural homeowners, municipalities, industry and even some farmers a matter of equity.

"Every water right issued since 1905 basically comes from the proratable districts, and that has to stop," Van Gundy said. "Everyone is benefiting from the water. Why isn't everyone paying for it?"

* David Lester can be reached at 509-577-7674 or dlester@yakimaherald.com.