WATER FIGHT: An effort to draw from the McKenzie River prompts objections
By Christian Wihtol
Eugene Register Guard
February 19, 2012
The McKenzie River appears inexhaustible as it tumbles wide, cold and fast from the Cascade Range on a winter’s day. Stand at the river’s edge near Vida and you’ll see up to 40,000 gallons flash by each second.
But a Lane County businessman is finding that it’s not easy trying to siphon a sizeable portion of the McKenzie’s bounty for possible sale to unidentified customers in southern Lane County.
Veneta developer Greg Demers is battling a statewide water advocacy group, the state Department of Water Resources and the state Department of Fish and Wildlife in his bid for permanent rights to pull 250 gallons a second from the river.
It’s a lot of water — enough to serve the entire city of Eugene in the winter — and it may be among the last claims that legally can be made for McKenzie water, meaning some cities that decades from now need more water could be blocked by Demers’ water right.
The advocacy group, WaterWatch, blasts Demers as a “speculator” bent on locking up access to the McKenzie.
“In Oregon, water belongs to the public, and only those who actually need water can acquire a right to use it,” said John DeVoe, executive director of Portland-based WaterWatch.
“Allowing a private company, with no known water needs or customers for this water, to lock up a large amount of water for future sale warps the system and encourages speculation.”
Meanwhile, the state, trying to protect endangered fish species, said Demers can have the 250 gallons a second, but only if he doesn’t draw the river below a set minimum flow rate in the hot summer months, when the river’s volume drops by as much as two-thirds from its winter peaks.
A minimum flow is needed to protect spring Chinook and Oregon chub in the late summer and early fall, the state said.
Demers is trying to kill that restriction, saying it is based on faulty science, overstates how much water the fish need and would prevent him from drawing the water he wants.
Demers, backed by a team of lawyers and scientists, said he’s pursuing a legitimate business venture.
“There’s a need for good, potable drinking water (in south Lane County),” he said.
“Ultimately, we see Willamette Water Co. being the south valley’s regional water producer,” he added. It will become “the cheapest source of water” for that area’s rural and city inhabitants, he said.
The dispute has dragged on for more than three years. Now, a state administrative law judge is set to rule on one part of it — whether Demers has met state rules entitling him to 250 gallons a second.
After that, the judge will hear the dispute over the minimum water flows to protect fish.
Whoever wins, an appeal is likely.
The laws of the land
Oregon’s water is controlled by complex state laws and regulations, plus official studies.
Experts disagree on how much proof of consumer demand a permit applicant such as Willamette Water Co. must show, how long a permit holder can keep a permit without using it, and what data are needed to craft fish-protection standards that a court will accept as trumping a permit holder’s water right.
Demers — a high-stakes entrepreneur with a background in logging, real estate development and, most recently, gravel mining at the controversial Parvin Butte mine above Dexter — got into the water business in 2006, buying the small Willamette Water Co.
The company consists of a collection of underground pipes, 171 service meters and 47 fire hydrants, which it uses to provide water to about 170 businesses and homes from Glenwood south to Goshen. The company buys that water from the Eugene Water & Electric Board, which has lines connecting with the water company’s.
Sales and commissions
The water company was founded in 1964 by former Gov. Bob Straub. Straub’s heirs in 2006 failed to report to the state Public Utility Commission that they sold the company, PUC spokesman Bob Valdez said. That violated state rules, and it means that the PUC has no details on the sale, he said. The agency continues to regulate Willamette Water Co. and its rates, however.
Demers has big — but very vague — plans for the tiny utility. He wants it to serve unidentified customers in a large rural swath of southern Lane County where scattered mobile home parks, rural subdivisions and farms are served by private wells.
Demers also wants it to serve the cities of Cottage Grove and Creswell — both already served by their own municipal water operations, which draw water from the Coast Fork of the Willamette River or its tributaries.
The company says it needs a guarantee of a lot of water, so it applied in 2008 to the Department of Water Resources for the right to pull 34 cubic feet — about 250 gallons — a second from the McKenzie. In the water business, cubic feet per second is a standard measure.
The company said it would draw water from a handful of spots on the McKenzie as it flows along the north side of Springfield, pipe it through lines owned by other utilities — possibly Springfield Utility Board or EWEB — to Willamette Water Co.’s lines in Goshen.
From there, it would flow into yet-to-be-built lines that the company would extend into rural areas or to Creswell or Cottage Grove, should demand materialize.
The massive amount of water requested, and the lack of specifics about its use, have gotten WaterWatch boiling.
A question of need
When the state Department of Water Resources tentatively approved the company’s application, WaterWatch protested, starting a legal process that culminated in a November hearing before an administrative law judge.
The judge is expected to rule this spring.
WaterWatch hammered at the state Department of Water Resources, saying the agency was lackadaisical for not insisting that the company prove that people actually want the water, and for failing to evaluate whether the request for so much water was reasonable, given the anemic economic outlook for rural areas of southern Lane County and the fact that Creswell and Cottage Grove already have all the water they need.
Thirty-four cubic feet of water per second is a formidable flow. Keep that big spigot open for just nine minutes and it would fill a standard 25-yard-long, six-lane swimming pool. Keep it open for 24 hours, and it would fill 160 such pools.
Willamette Water has not named any individuals, companies or cities that want to buy its water.
“Speculation in Oregon’s water resources is not allowed” under state law, insists WaterWatch’s attorney, Lisa Brown.
But Demers said it’s unreasonable to expect his company to sign up customers before he gets water rights.
“When you’re on 30-, 40-, 50-year horizon, you don’t know what the specifics are going to be. You look at the acreage and uses, and you run projections,” he said.
And so far, the state has agreed with him.
Potential users enough
Responding to WaterWatch, the state said that under Oregon law it doesn’t need specific water use plans in order to grant a water right such as that sought by Willamette Water Co.
Instead, the state said it simply needs to find that there is evidence of potential for the applicant to use the water eventually, and that when the water is tapped, it is put to “beneficial use” and is not “wasted.”
A Department of Water Resources staff member, Bill Fujii, testified at the November hearing that it’s possible over the long term that Creswell or Cottage Grove might want to use Willamette Water Co. water as emergency backup for their municipal systems. For example, if the Dorena Dam above Cottage Grove failed, the water in the Coast Fork would become too muddy to drink, and the cities would need a backup source, he said.
As for Willamette Water Co. trying to market water in south Lane County, “more power to them,” Fujii said.
Meeting future needs
Creswell’s and Cottage Grove’s water source, the Coast Fork of the Willamette River and its tributaries, is tapped out, city and state officials say, because of existing water rights and the need to protect fish. So the cities probably could not draw more water from it, should their needs exceed the legal rights they already have.
Cottage Grove City Manager Richard Meyers said his city may need some other water source at some point. He declined to comment on the Willamette Water Co. case, noting that the city is in its own legal dispute with WaterWatch over the city’s permit to draw water from a tributary of the Coast Fork.
WaterWatch argues that some of the water the city may be legally entitled to draw, but doesn’t use, should be allocated for fish protection.
The city of Creswell, meanwhile, three years ago completed a $10 million upgrade of its water plant, which filters water from the Coast Fork, said Mark Shrives, city administrator. The new plant also is capable of cleaning water from the city’s old and unused well field, where the groundwater has arsenic. If the city needed more water, it also might try to buy water that’s now stored in federal reservoirs in the area, he added.
But none of this means the city in the long haul might not want to work with Willamette Water Co., Shrives said. The company’s pipes are only about four miles north of Creswell. If the city needed more water, and the only place to get it was the McKenzie, “Willamette Water Co. is the way we would do that. …
“We would run a pipeline from Goshen. The cost to do it by yourself (from the McKenzie River), you’d never get there” financially, he said.
WaterWatch’s Brown said the two cities could end up in a bind if Willamette Water Co. secures a near-monopoly on all remaining water that legally can be pulled from the McKenzie.
Existing users, including EWEB, already have rights to most of the amount the state says can be drawn from that river. If Cottage Grove and Creswell, years from now, need McKenzie water, they might have no choice but to deal with Willamette Water Co., she said.
Brown said she’s worried that the company will sit on the water right for years without using it.
The state has the authority to cancel a water right if the holder fails to use it, Brown said. But the state rarely if ever does that, and instead readily renews the rights, she said.
It’s true that the agency rarely denies a request for renewal of an unused water right, said Dwight French, state water rights services administrator.
The state wants to encourage development of water resources, he said, with rights allocated in the order that users apply.
“The department doesn’t apologize for the first-in-time, first-in-right (policy). That’s really one of the primary doctrines of the water code in Oregon.”
If Cottage Grove or Creswell “one day decide they want water from the McKenzie, and Willamette Water Co. (previously) applied for this, that’s how the system works.”
TODAY: Greg Demers battles for the right to McKenzie River water
MONDAY: Demers is $4 million behind on federal and state taxes