Directs the Department of Environment and Natural Resources (DENR), in decisions on allocation of water, to provide to the maximum extent legally permissible for the long-term needs identified in local water supply plans. Authorizes DENR to enter into agreements with units of local government to assist in local and regional water supply development, with priority to be given to requests for regional water supplies and requests that benefit local governments with the most severe forecast water shortages. Creates a two-year window for DENR determination of preferred alternatives for future local water supplies when DENR contracts with a local government to assist in water supply development, unless the local government agrees to an extension. Makes determination by DENR of a preferred alternative binding on all state agencies and effective in meeting requirements of the State Environmental Policy Act. For regional water supply systems, authorizes DENR to become a co-applicant for federal approvals for the preferred water supply alternative. Authorizes the creation of 'regional water supply planning organizations' by one or more water systems. Regional water supply planning organizations may include representatives of local government water systems and registered water withdrawers.