The future of water allocation in Oregon

In this year’s water issue of the Digger, you’ve had an opportunity to read about the importance of this vital resource. In recent years, the Oregon Water Resources Department (OWRD) has come under intense pressure from the press and Secretary of State’s Audits Division to better manage the state’s water.

For nursery and greenhouse growers, this means it is increasingly unlikely that you will be able to acquire new water rights. Oregon’s surface streams have been closed to new irrigation water rights for many years due to over-appropriation. However, in most parts of the state, OWRD has continued to issue new groundwater rights.

In 2022, that changed when the Oregon Water Resources Commission instructed OWRD staff to stop issuing new groundwater rights unless sufficient hydrologic data exists to show the new use would not impair the aquifer or hydrologically connected streams. OWRD plans to schedule rulemaking in 2023 to make this a formal legal position.

As a result, growers will be left with one primary mechanism to acquire new water rights — the process known as a water right transfer. This article provides an overview of water right transfers, including key considerations for growers.

Water right basics

OWRD manages water use through a permitting system based on the prior appropriation doctrine, often referred to as “first in time, first in right.” The priority system gives a significant advantage to older or “senior” water rights, which OWRD must assure are fully satisfied before junior water rights can divert or pump.

Once a landowner goes through the permitting process, OWRD issues a water right certificate, which is akin to holding a deed for the use of that water. Generally, ownership of a water right for irrigation or nursery use is conveyed with the underlying land to which the water right is “appurtenant.”

A water right certificate contains the essential attributes of the water right, including place of use (POU), point of diversion (POD) (for surface water) or appropriation (POA) (for groundwater), type of use and priority date. Often a certificate also includes conditions, such as a requirement to measure and report water use. Water must be used consistently with the terms of the certificate.

Water right transfers

A water right’s essential attributes can only be changed through the OWRD transfer process. If a transfer is successful, OWRD issues a new water right certificate describing the changed attributes. Importantly, the priority date remains the same as the original water right, making a transfer a valuable tool in the face of increasing water scarcity and regulation.

A transfer application moves through an administrative process, much like the steps to acquire a water right permit. This is a technically complex process that requires a certified water rights examiner (CWRE) to submit a transfer map in support of the application. The process involves multiple steps that take approximately one year to complete. However, if the transfer is opposed, it can take much longer.
OWRD reviews transfer applications based on several criteria, discussed below:

Water use subject to transfer. The right proposed for transfer must meet the definition in ORS 540.505 as a “water use subject to transfer.” This includes certificated water rights, court decreed water rights, and permits and completed transfers for which proof of beneficial use (completion) have been submitted to OWRD. At the time of this article, OWRD has determined that certificated reservoir rights are not subject to transfer if the application proposes to change the POD or POU.

Water right not subject to forfeiture. The right must have been used over the past five years and must not be subject to forfeiture.

Same source. If the transfer involves moving the POD/POA, it must develop water from the same source as the original POD/POA. For example, if the water right names the Molalla River as the source, an applicant could not propose to move the POD to the Pudding River. If the transfer involves a well, the new well must pull water from the same aquifer as the original well.

No enlargement. The transfer cannot result in an enlargement of the original water right. Enlargement is defined as increasing the rate or volume of water per acre, increasing the number of acres irrigated, failing to keep the original POU from receiving any irrigation water in the future, and diverting more water at the new POD/POA than is legally available to that right at the original POD/POA.

No injury. A transfer cannot injure an existing water right — regardless of whether it is junior or senior. Injury is defined as a proposed transfer resulting in another existing water right not receiving previously available water to which it is legally entitled. This can be a complicated analysis, involving a review of historic use patterns and projected impacts of the new use. In practice, this generally means that (i) “downstream” transfers are more easily accomplished than upstream transfers, (ii) long-distance transfers are more complicated, and (iii) transfers to new a new well located close to another well or stream will be more difficult.

It is important to note that many groundwater rights in the Willamette Valley predate the 1955 groundwater permitting code. These “groundwater registrations” are unadjudicated claims to the use of groundwater. A groundwater registration does not qualify as a water use subject to transfer.
However, OWRD uses the groundwater registration modification process to allow landowners to make many of the same changes that would be allowed in a transfer.

The transfer process is technically and legally complex. It is important to assemble a knowledgeable professional team at the outset of the transfer process. Early identification of potential legal issues and engagement with OWRD can help ensure a successful application.

As a member benefit, the OAN provides its members with legal counsel under the Legal Access program. The program provides up to 30 minutes of free legal advice each month on matters pertaining to your business. To use this benefit, call attorney Steve Shropshire at Jordan Ramis PC at 503-598-5583. Steve is a shareholder at Jordan Ramis PC with offices in Portland, Bend and Vancouver.

Legal Access from the March 2023 issue of Digger magazine | Download PDF