By Mateusz Perkowski | Dec. 14, 2023 | Capital Press
The irony of the legal dispute over upgrades to the Painted Hills Reservoir in Central Oregon is that everyone agrees the project helps the environment.
Oregon’s water regulators have contributed money toward raising the dam and storing more water for fish, even though they’re now fighting the project’s owner in court.
The problem isn’t the reservoir’s expansion but the legal mechanism needed to implement a critical aspect of the project, which observers say has far-reaching implications for Oregon water law.
Apart from upgrading the dam, owner Bridge Creek Ranch needs to change the point of diversion for the reservoir’s water supply. That requires a transfer of storage water rights that Oregon regulators have refused to approve.
“We’re faced with a situation where the outcome of the whole project is in jeopardy, to store more water for fish life,” said Mike Pati, property manager for the Papé Group machinery company, which owns the reservoir as part of Bridge Creek Ranch near Mitchell, Oregon.
Lack of Power
State Water Resources Department (OWRD) managers say they aren’t persecuting this particular project. They just don’t believe they have the power under water law to permit storage right transfers anywhere.
The agency’s limited view of its authority in this instance doesn’t just threaten the Painted Hills Reservoir project, but others that could require storage right transfers.
“There’s a bigger picture here. It’s not just a local matter,” Pati said. “This case is important to all Oregonians.”
Many points of diversion are aging and need replacement or rehabilitation, which often requires relocating them, he said. For example, older dams could be moved so they no longer block fish passage.
“We’re not just talking about Bridge Creek Ranch. We’re talking about all those scenarios,” Pati said. “It could have a chilling effect on infrastructure upgrades.”
While it didn’t intend to pick a fight with OWRD over the issue, the ranch’s lawsuit against the agency has given water users hope the storage right transfer policy will change.
Irrigators are counting on the reservoir’s expansion to loosen legal restraints they say have immobilized water storage projects across the state.
One Victory Already
The ranch has already won an important court battle against OWRD over the project.
For the ranch’s legal victory to apply to other reservoirs statewide, however, it must be affirmed by the Oregon Court of Appeals, which is currently reviewing the case.
Strategically speaking, the agriculture industry is heartened that Bridge Creek Ranch has prevailed at this initial stage, even though the ruling wasn’t the final word.
“It’s generally better to be defending the appeal,” said Steve Shropshire, who represents the Oregon Farm Bureau and Oregon Association of Nurseries in the case. “It’s a nice momentum starter.”
The lawsuit aims to overturn a state policy that shut down most water storage transfers five years ago, thus prohibiting reservoirs and their points of diversion from being moved.
As a result, dams can’t be rebuilt or upgraded if they will be shifted upstream or downstream. Critics of the policy claim diversion infrastructure has basically been locked in place, regardless of the transfer’s purpose or benefit.
Three decades ago, for example, many nurseries built retention ponds to capture runoff for irrigating their plants, Shropshire said. Some ponds were built within streams but now need replacement.
“Nurseries would like to be able to take them off-channel and move them somewhere more environmentally friendly,” he said. “Right now, you wouldn’t be able to.”
Water can’t even be re-allocated among existing reservoirs to ensure adequate supplies among various irrigators, critics say.
Spotted Frog Impact
Irrigation districts in Central Oregon, for instance, are trying to improve habitats for the protected Oregon spotted frog by releasing water in winter that would typically remain in storage, Shropshire said.
These releases require exchanging water between reservoirs in the region, which could be done more easily and elegantly if storage right transfers were allowed, he said. The OWRD’s policy hinders what amounts to an accounting maneuver to ensure equitable irrigation supplies.
In general, most of the state’s surface waters have been appropriated already, and pending regulations could greatly limit groundwater rights as well, so a rigid approach to transfers doesn’t make sense, Shropshire said.
“As new water permitting becomes increasingly difficult, the ability to transfer water rights will become increasingly important,” he said. “We as a state will need maximum flexibility for that to work effectively.”
State, Environmentalists’ Position
The state government argues transferring storage rights under current rules would allow reservoirs to be moved without fully considering the ecological consequences.
Transfers are only evaluated to ensure they don’t enlarge a water right or injure other users, while new reservoirs undergo more rigorous scrutiny, said Denise Fjordbeck, the state attorney representing OWRD.
The question of transferring storage rights pits environmental protection against fairness to irrigators, she said during appellate arguments.
“It’s a matter of whose ox is being gored,” Fjordbeck said.
Environmental advocates want to impose stricter standards that would let the public weigh in on storage right transfers, arguing they often have bigger effects than other types of transfers.
“The current transfer process is not equipped to address those issues,” said Brian Posewitz, staff attorney for the WaterWatch of Oregon nonprofit. “We don’t think there’s an adequate public review about the impacts on the system.”
WaterWatch fears the current level of regulatory scrutiny is insufficient for storage right transfers, potentially allowing environmentally destructive proposals that would never pass muster under rules for new projects.
“There are good reasons for treating the transfer of storage rights differently,” he said.
For example, off-channel reservoirs could be moved to impede fish passage, which isn’t a risk when irrigators transfer surface water rights from one field to another, according to the nonprofit.
“You can pick up that reservoir and put it right in the middle of the stream you’re getting the water from,” Posewitz said. “It should have the same public interest review that a new water right gets.”
Constructing dams and flooding land would trigger other regulations, but they won’t necessarily offer all the same protections as state water law, he said.
“The water rights issue has its own role to play that isn’t going to be addressed in the other regulatory processes,” Posewitz said.
Why Transfers Are Needed
Critics counter that OWRD’s refusal to process storage right transfers is actually more likely to cause environmental problems as old water infrastructure continues to age and degrade.
The agriculture industry is joined by a coalition of cities, utilities and other water users in rejecting the argument that storage transfers will result in environmental devastation.
Water right regulations are intended to prevent injury to senior water users, but the review envisioned by WaterWatch “would be redundant of other permitting processes,” according to the Oregon Water Utility Council and affiliated groups.
The state’s departments of Environmental Quality and Fish and Wildlife would ensure projects avoid or mitigate adverse consequences and applicants must also comply with the federal Clean Water Act, National Environmental Policy Act and Endangered Species Act, the groups said.
Predictions of environmental harm are “grossly inaccurate and misleading,” they said.
These and other arguments weren’t deliberated in public before OWRD decided to prohibit water storage transfers, unlike other major policy changes considered by the agency.
The consequences weren’t weighed under any legislative or regulatory process because it was a matter of statutory interpretation, critics said, adding that state water regulators simply concluded they don’t have the legal authority to approve the transfers.
Why Transfers Were Halted
The OWRD has acknowledged historically approving storage transfers despite ambiguities in state law, but “further analysis” led the agency to decide in 2018 that it lacked that power.
Though lawmakers could clarify that OWRD does in fact have the authority, they’ve so far succeeded in only a partial fix.
Legislation passed in 2021 allows the purpose of water storage rights to be changed — from irrigation to municipal uses, for example — but remains silent on the location of reservoirs and points of diversion.
Agriculture and environmental advocates couldn’t agree on the regulatory requirements imposed on such transfers, derailing legislation that would have resolved the problem more comprehensively.
Breaking the Logjam
By taking the fight from the statehouse to the courtroom, the transfer sought by Bridge Creek Ranch offers an alternative way to break the logjam.
Plans for the dam-raising project predate OWRD’s change in policy, so the conflict wasn’t engineered to test its authority. However, affected organizations believe the case is well-suited as a legal vehicle to challenge the agency’s interpretation.
“It’s a clear set of facts that lends itself to a clear decision,” said Shropshire, the attorney representing farm groups.
The cattle ranch expanded Painted Hills Reservoir three years ago to store additional water, which is released into two nearby creeks to enhance fish habitat during summer. Water from the reservoir has been used to irrigate the ranch’s crops for 140 years.
“The incremental 500 acre-feet of water is strictly for the purpose of increasing in-stream flows and reducing in-stream temperatures,” said Pati, the property manager.
While raising the dam 12 feet has boosted water supplies for fish, the ranch also wants to install a modern intake structure that’s less disruptive to fish habitat.
“The last thing we want to do is impact the positive work with significant disturbance to the stream,” Pati said. “We want to replace it with something far superior.”
However, to replace the intake and allow the project to function as planned, Bridge Creek Ranch must move the reservoir’s point of diversion off federal land and onto its property — sparking the dispute.
The project is a part of wider watershed restoration and irrigation efficiency improvements undertaken by Bridge Creek Ranch and other landowners and agencies in the region.
“This is another step in a long chain of collaborative work,” said Pati, emphasizing that the ranch has an excellent working relationship with OWRD, so the legal disagreement is not personal.
“They’ve been a long term partner of ours out here,” he said. “We sincerely appreciate how they’ve operated.”
The $1 million cost of expanding the reservoir was partially funded by grants from OWRD and the Oregon Watershed Enhancement Board.
But because the point of diversion must be moved a quarter-mile, the ranch’s transfer application was rejected, prompting its lawsuit against the government last year.
The ranch’s legal petition met with success in Marion County Circuit Court in early 2023.
Circuit Judge Audrey Broyles determined OWRD has the authority to transfer storage water rights in a four-paragraph, single-page opinion letter.
The judge issued what’s called a writ of mandamus, considered an “extraordinary” legal remedy, ordering the agency to process the ranch’s transfer application.
While the state government is complying with the judgment and processing the ranch’s application, it’s also challenging the judge’s decision before the state’s Court of Appeals.
“We all await clarity from the appellate court,” Pati said.
Is Storage a “Use?”
The transfer policy’s repercussions may be far-reaching but the legal argument over OWRD’s power is largely semantic: Is storage actually a “use” of water?
According to OWRD, storage isn’t a “use” of the water, and such rights can’t be transferred, since state law only allows for the transfer of water uses under revisions passed in 1995.
To use stored water, an applicant must obtain a secondary water right for agricultural, municipal or industrial purposes, the agency claims. Water cannot simply be hoarded without any use, though it’s possible to obtain a right to use it in the reservoir for fish habitat.
“Storage is not in and of itself a beneficial use and the statutes reflect that,” said Fjordbeck, the state’s attorney, during oral arguments this autumn. “If it’s not a water use, it’s not a water use subject to transfer.”
Moving a reservoir or point of diversion isn’t impossible, since irrigators can seek new water rights at another location, Fjordbeck said.
“The remedy would not be to apply for a transfer, but to apply for a new storage right,” she said.
Under the West’s doctrine of prior appropriation, however, farmers with more recent water rights are more prone to having their irrigation curtailed or “regulated off.”
“You would be establishing a new priority date,” Fjordbeck said. “They’d have to apply for a new storage right that would be junior to any intervening rights.”
During oral arguments before the Court of Appeals, Judge Douglas Tookey wondered if that wasn’t a raw deal for water users.
“That doesn’t seem fair in the whole scheme of it, does it?” he asked.
Fjordbeck replied that she might be inclined to agree if she were designing the system, but said the law sought to balance the interests of irrigators against environmental safeguards.
“It might be unfair to the ultimate users of the water that they’re losing the priority,” she said. “But on the other hand, the scope of the issues that can be considered is also different.”
According to Bridge Creek Ranch, OWRD’s restrictive understanding of what qualifies as a water use is “meritless,” since the 1995 water law amendments were “intended to broaden, not narrow, OWRD’s transfer authority.”
Every category of water right in Oregon is “based on beneficial use,” including storage rights, said Sara Kobak, the ranch’s attorney. Just like the other kinds, storage rights must be “proved up” and “perfected” by actually storing water.
“Storage water rights are developed the same way and based on the same principles as any other type of water right,” Kobak said.
A secondary water right is necessary to release stored water for irrigation or other purposes, and failure to do so may undermine storage rights in some circumstances, she said. However, those tenets don’t negate storage as a beneficial use.
“They are treated as distinct uses,” Kobak said. “They are each perfected separately.”
Diverting water for storage is a method of using that water, just as it’s used for other purposes, she said. Storage is simply a necessary first step that enables those other uses under a secondary water right.
“The use of water is the storage to create that water supply,” Kobak said.
Despite their sharply different opinions about water storage, the ranch and the state agreed to an expedited briefing schedule to get an appellate ruling as soon as possible.
Though the farm industry expects a decision “sooner than later,” the Court of Appeals doesn’t face a statutory deadline to issue an opinion.
The state government is eager to get the legal question resolved, as “it’s important not only to the folks involved in this case,” Fjordbeck told the appellate judges.
If the government’s arrived at the wrong conclusion, “Okay, just tell us, and we’ll know what the rules are going forward,” she said. “We have a dispute here that we haven’t been able to resolve legislatively and it needs an answer.”
This article originally appeared in the Dec. 14, 2023 edition of Capital Press.