rights in the name of the district.

Proponents’ answer:  Even though a water right certificate may be issued in the name of an irrigation district, the underlying right is owned by the landowner. 

Opponents’ response:  First, an Attorney General’s opinion is not law and should not be given the force and effect of law. The office of the Attorney General is created by statute.  See ORS 180.010, et seq.  ORS 180.060(2) authorizes the Attorney General to give written opinions only when requested upon a question of law to any public agency or subdivision of the state of Oregon.  However, importantly, the general nature of the office of the Attorney General is executive, not judicial, Richardson v. Neuner, 183 Or 558, 562, 194 P2d 989 (1948), and Attorney General opinions, like any other opinion issued by an executive agency, are merely advisory and do not have the force and effect of law, see State v. Mott, 163 Or 631, 640, 97 P2d 950 (1940) (Secretary of State not bound to follow Attorney General opinion); Rosell v. State Industrial Accident Comm’n, 164 Or 173, 184, 95 P2d 726 (1939).  Indeed, such opinions can be erroneous.  See Mott, 163 Or at 640; Rosell, 164 Or at 184.  It is the province of the court to declare what the law is, and a court, while considering an Attorney General opinion, will independently interpret the law.  McCarthy v. Coos Head Timber Co., 208 Or 371, 400, 302 P2d 238 (1956). Thus to treat an Attorney General’s opinion as law is to imbue that opinion with authority it does not have—authority that is reserved for the judiciary. The bill’s proponents have given such authority to this advisory opinion, ignoring often contrary case law and conflicting statutes.

The Oregon Supreme Court described the purpose of the Irrigation District Law as "authoriz[ing] the organization of a public corporation for the purpose of acquiring and owning irrigation ditches, canals, reservoirs, works, and water rights and distributing water to the settlers within the boundaries of the district." Little Walla Walla Irrigation Dist. v. Preston, 46 Or 5, 8, 78 P 982 (1904) (emphasis added). Oregon courts have continued to recognize district ownership in water rights. In 1921, a decree of the Deschutes County Circuit Court authorized the Central Oregon Irrigation District to sell 2,500 acres of water rights to landowners. Alexander v. Central Oregon Irrigation Dist., 19 Or App 452, 456, 528 P2d 582 (1974) (recognizing district’s authority to sell water rights it owned); Cleaver v. Judd, 238 Or 266, 271, 393 P2d 103 (1964) (recognizing ownership interest for purposes of recapturing waste and seepage water); Smith v. Enterprise Irrigation Dist., 160 Or 372, 379, 85 P2d 1021 (1939) (describing water rights as property of district).

Clearly, an irrigation district can own water rights. Whether a district possesses full ownership or a limited ownership may be fact-specific, but either way, the irrigation district does have an ownership interest in water rights under Oregon statute as interpreted by Oregon courts. This does not necessarily mean that any particular district has full ownership of the water rights. Districts hold the water rights for purposes of diversion and delivery of the water. Irrigators hold the water rights for purposes of putting the water to beneficial use on the land that is described in the water right certificate (this is the concept of "appurtenancy"). Thus there is a shared ownership interest in the water right in which the parties each have a separate interest that is dependent on the interest held by the other party. Neither can hold the water right or derive benefit from the water right without the other—the irrigator has no water if the district cannot divert the water, and the district has no need to divert the water, if the irrigator cannot put the water to beneficial use.

Thus, we do not disagree with the statement by proponents that a district holds the water right in trust for the benefit of the district’s irrigators as provided in ORS 545.253. The Oregon Supreme Court acknowledged this trust relationship as to the water rights and other property of the district. Smith, 160 Or at 379. This trust relationship between an irrigation district and the landowners within the district creates, at least, a limited ownership interest in the district. Without this ownership interest, the district would have nothing to hold in trust, and there would be no trust corpus. Since there can be no trust if there is no trust corpus, it follows that for an irrigation district to have a trust relationship with the water users in the district with regard to the water rights held by the district, the district must have an ownership interest in those water rights. The extent of that ownership interest is more fully described in the Irrigation District Law (ORS Chapter 545).

Since the proponents like to cite the Attorney General’s opinion, we want to point out that the author of that opinion recognizes two kinds of ownership interest in the water rights: that of the trust ownership on the part of the district, and that of ownership for purposes of beneficial use on the part of the landowners. If the landowners are the only ones with an ownership interest in the water rights, it would not have been necessary for the author to differentiate between these two interests or even to acknowledge the district’s ownership interest.

Opponents’ response:  First, the Attorney General opinion is simply that, an opinion. (See Opponent’s response to Issue 1 above.) As such, it does not carry the force and effect of law and should not be interpreted or treated as if it were law.

Second, districts currently hold water rights issued in at least four ways: (1) in the district’s name alone, (2) in the name of the district and the Bureau of Reclamation, (3) in the name of the district and a landowner in the district or (4) in the name of the district, the Bureau of Reclamation and a landowner in the district. In all cases, that water right certificate lists the lands to which that water right is appurtenant as part of the certificate. Under HB 3298-A, the water right will no longer be held or owned by the district or the Bureau of Reclamation, but rather by the many landowners of the lands listed as having the water right appurtenant to their land. To recognize that specific ownership and remove the shared interest of all the landowners of the appurtenant land in the water right, the water right must be dissolved and then reissued in the name of each individual landowner. To do otherwise would create a situation in which an individual landowner would be unable to sever his or her water right from the rest of the water rights held by the landowners—which would result in exactly the same situation as if the district continued to hold the water right. To do anything else would run counter to the intent of this bill.

district holds the water right?

Proponents’ answer:  The person who has title in fee to the appurtenant property described by the water right will own the water right. 

Opponents’ response: The question in Ickes was not about the ownership of the water rights but whether or not the federal government was an indispensable party defendant in the lawsuit. If the Court found that the federal government had an ownership interest in the water right, the suit would have failed. In Ickes, the landowners or the predecessors in interest applied for the water rights, not the Bureau of Reclamation or a district. The opponents of HB 3298-A have not argued that a district or the Bureau of Reclamation have an ownership interest in the water right of a landowner who applies for the water right and whose name is the sole name on the water right, as was situation in Ickes.

Further, in Ickes, the landowners had fully discharged their contractual obligations to the federal government for the construction and development of the delivery system, their interest in the water rights was vested and they were the owners of the water rights. It was, at least in part, on this basis that the Court found the federal government did not have an ownership interest in the water rights. And finally, the U.S. Supreme Court acknowledges that it applies the law of the state that governs the water rights. In this case, the water law of the state of Washington was applied, not the law of the state of Oregon. We do not know what would be the result of applying Oregon water law to a similar fact pattern.

Nevertheless, Ickes is consistent with the concept that a district holds the water right in trust for the water users, and the landowners hold the beneficial use interest in that water right.

In Nevada v. United States, cited by the proponents of the bill, the Court did not state that the federal government had no interest in the water rights at issue, only that it did not have full ownership interest in the water rights. The U.S. Supreme Court did not attempt to determine what that nominal interest might be or to define the federal governments’ interest in any terms other than "nominal."

Once again the Court referred to the relevant state statutes when examining the relevance of appurtenance in determining ownership. As discussed under Issue 7, the Oregon Supreme Court has stated that appurtenance does not equal ownership of a water right in Oregon. Thus the U.S. Supreme Court might reach a different conclusion when applying Oregon law to the question of the federal ownership interest in a water right in a Bureau of Reclamation project.

The opponents of the bill do not dispute that the federal government does not have full ownership of the water right. But to say that means it has no interest in the water right does not comport with the U.S. Supreme Court’s determination. Moreover, acknowledging that the federal government has a nominal interest in the water right, whatever "nominal" means, leaves the original question unanswered—what happens with regard to the federal government’s interest if HB 3298-A is enacted? 

construction of the water delivery facilities?

Proponents’ answer:  Nothing. Such districts will continue to be indebted to the federal government until the debt is paid.

Opponents’ response:  The bonded indebtedness is often secured by the assets of the district, including, but not limited to, the water rights held by the district. To further secure the debt to the federal government, the United States is named as a holder of the water right through the Bureau of Reclamation, giving the federal government at least some ownership interest in that water right. This bill will divest the district of any ownership interest in the water right, thereby removing that asset as security for the bonded indebtedness. Further, by giving full ownership of the water right to the landowner, there is a risk that the landowner may sell or transfer the water right outside the district, which would limit the district’s ability to meet its debt obligations. There has been no test of the full effect of divesting the district and the Bureau of Reclamation of any interest in the water rights. Nevertheless, the risk is there and to pass this bill could put the districts at risk of being unable to fulfill their financial obligations to the federal government. Further, it is unknown what actions the federal government might take against a district if there is a change in a district’s security and ability to pay that is contrary to the agreement between the federal government and the district. Nor is it clear whether the federal government could or would then turn to the individual landowners for repayment of the debt and, if so, whether they would be held individually liable for the entire debt.

Opponents’ response:  The Oregon Water Resources Department testified, during the work sessions on HB 3298-A, about its concerns that this bill could impact the Klamath Basin adjudication. No one knows with certainty what that impact may be, but concerns include whether or not the districts could continue to serve as the claimants on behalf of all water users in the districts and that the change in state law may open the door for the federal government and/or the Tribes to relitigate the state’s ability to adjudicate the Tribes’ water rights. Admittedly, these concerns are untested, but the Oregon Water Resources Department has raised them in its testimony. It is foolhardy to charge forward with a bill that has the potential to do such damage without taking the time to fully understand the potential impact of such a sweeping change in Oregon water law on the Klamath Basin adjudication (and, for that matter, the impact of this change on other aspects of Oregon’s water law). There is no need to hurry to adopt this bill, especially in light of the potential harm it could do to the Klamath Basin adjudication.

Proponents’ answer:  Farmers who do not own their land will be able to continue using water so long as they have authorization to use the land to which the water right is appurtenant. 

Opponents’ response:  At the very least, the farmer who leases land and incurs the costs of developing the water right could be damaged when the water right, which is in the tenant farmer’s name, is suddenly taken from that farmer and given to the landowner by the state of Oregon under this bill. This bill clearly takes away the ownership of the water right developed by that lessee and gives it to the landlord. This change would necessitate a renegotiation of whatever contractual relationship exists between the lessee and the landlord, with the landlord suddenly in a much stronger position as the owner of the water right than was the case when the lessee owned the water right.

Proponents’ answer: HB 3298 would not make appurtenancy synonymous with ownership

Opponents’ response:  Although the proponents of this bill assert that the bill would not make appurtenancy synonymous with ownership of the water right, it is hard to imagine otherwise when the bill clearly ties ownership to appurtenancy by awarding the ownership of the water right to the owner of the land to which that water right is appurtenant. Simply put, under this bill, if there is no appurtenancy, there is no ownership of the water right. Thus ownership and appurtenancy are synonymous under HB 3298-A.

Under Oregon law, appurtenancy and ownership are not the same. With the adoption of its water code, Oregon moved from recognition of both riparian and appropriative rights to a code based on the doctrine of prior appropriation. Lewis v. McClure, 8 Or 273 (1880); see also Janet C. Neuman, 6 Oregon, Water and Water Rights (Robert E. Beck ed., 1991 & 1994 replacement vol). Whereas riparian rights are based on land ownership, prior appropriation relies on "first in time, first in right." Under Oregon’s water code, the actual beneficial use of water is the basis for recognized water rights. Alexander, 9 Or App at 456. This reflects the principles of prior-appropriation doctrine and sets prior appropriation apart from riparian rights that tie the water right to ownership of land.

The Oregon Supreme Court has stated that nothing in ORS Chapter 537 prevents someone from applying water to land that he or she does not own. Wilber v. Wheeler, 273 Or 855, 861, 543 P2d 1052 (1975). From this statement, it can be inferred that there is no requirement that the party putting water to beneficial use must do so on land he or she owns. Or, stated another way, the land to which the water right is appurtenant does not have to be owned by the party putting the water to beneficial use on that land. There simply is no requirement in the prior-appropriation doctrine that the owner of a water right be the owner of the land to which that right is appurtenant. To impose such a requirement would be to turn the doctrine of prior appropriation on its ear, upending the foundation on which Oregon’s water law is built.

Assuming for the sake of this discussion that the district diverts the water and the farmer puts the water to beneficial use, nothing says the farmer has to be the landowner. The farmer who puts the water to beneficial use could lease the land. The measure is that the water is put to beneficial use on the land that is appurtenant to the water right, without reference to the ownership relationship between the farmer and the land on which the water is applied. The appurtenant land is described in the water right certificate or decree, but there is nothing that says the owner of that land is the only one who can put the water to beneficial use on the land. The farmer has an ownership interest in the water right for the purpose of the beneficial use but does not have full ownership of the water right.

The discussion of appurtenancy and ownership skirts the diversion element of the water right. Without diversion, there is no water right. And the right to divert does not include any requirement of land ownership. Beneficial use is only one element of the water right. The proponents of HB 3298-A argue that beneficial use is the only element that counts when looking at ownership. This argument ignores the fact that the irrigation district diverts the water and as such is an equal partner in proving the water right. The district has an ownership interest in the water right for the purpose of diverting that water. Without that diversion, the landowner would have no water to put to beneficial use. Tying ownership of the water right to ownership of the land ignores the district’s role in developing the water right and the continuing need for the district to sustain that role as diverter of the water.

In recognizing the role of an irrigation district in developing water for use on land within the district, the Oregon Supreme Court stated, "an appropriation may be made for the future use of another; and for the future use upon lands which the appropriator does not then own, or which he does not contemplate owning and which he never owns." In re Waters of Deschutes River, 134 Or 623, 655, 286 P 563, 294 P 1049 (1930) (citations omitted). Thus the district can appropriate water for land that it neither owns nor anticipates owning at the time of the application for a water right. There is no requirement that the water right be tied to ownership of land. The requirement is that the water be appurtenant to land, which means that the use of the water is limited to those lands which are described in the certificate or decree. Id. at 656. There is no requirement that the water right be applied for or held by the owner of the land, at least within the boundaries of an irrigation district.

Opponents’ response:  Under the Irrigation District Law, an irrigation district, through its board of directors, has the right to "acquire, by lease, purchase, condemnation or other legal means, all lands, water, water rights, rights of way, easements and other property, * * * necessary for the construction, use, supply, maintenance, repair and improvement of any canals and works proposed to the constructed by the board." ORS 545.239(1) (emphasis added). Further, the title to property acquired by the district immediately vests in the district and is held in fee simple or "such lesser estate as shall be designated in the decree of appropriation." Id. The legislature, in enacting the Irrigation District Law, anticipated and intended that an irrigation district be able to own and hold title to water rights as property of the district. Thus, under Payette-Oregon, 162 Or at 461, an irrigation district can acquire water rights. Acquisition implies ownership, as there is nothing in the statutes that requires the district to in any way divest itself of the water rights it has acquired at any time.

Under HB 3298-A, districts arguably would no longer have the right to use water under any certificate of water use. ORS 537.250(3) states that "rights to the use of water acquired under the provisions of the Water Right Act as set forth in a certificate issued under subsection (1) of this section, shall continue in the owner thereof, so long as the water shall be applied to a beneficial use and in accordance with the terms of the certificate * * *." (Emphasis added.) Since the statute specifically says that the right to use the water "shall continue in the owner thereof," a change in the owner of the certificate would mean that the current owner of the certificate would no longer have the right to use the water under that section of the statute.

It is questionable whether districts would be able to "acquire the right to the beneficial use" of water after this bill is passed. ORS 537.130(1). Denial of "ownership" to a district arguably means denial of the right to the beneficial use of water, which is the essence of ownership of that water right. If districts are unable to hold permits for the use of water under ORS 537.130, they will no longer be able to "use, store or divert any waters" in the state.

Because the focus here is on the right to use, divert, or store water, change of "ownership" implies change of those rights and the associated duties and privileges. If districts no longer have that ownership interest, they will no longer have the rights, privileges and duties associated with the appropriative right to store, divert or use water under ORS 537.130.

Opponents’ response:  Because they would no longer be owners of water rights, districts would be unable to claim injury to existing water rights and therefore unable to contest certain transfers or permit applications on the basis of harm to existing water rights. To have standing to contest a transfer, a party must be able to show injury to its water right. As such, districts would have less standing than even WaterWatch (which purports to represent the whole public interest) in protesting or complaining about transfers or instream water rights that could affect irrigation land. The districts, in short, would cease to be advocates on water rights issues, when such advocacy requires ownership or holding of a water right.

The abilities given to a district board of directors under ORS 545.225 relate to the rights, privileges and immunities created by the Irrigation District Law. HB 3298-A would amend the water code by changing the definitions of "owner" and "holder" of a water right. The bill’s proponents cannot assert that the landowner owns the water right under the water code without acknowledging that the district’s responsibilities change insofar as protecting those water rights. How can a district board take responsibility for protecting the water rights of the landowners? Since HB 3298-A would make water rights the private property of the landowners, the district would have no more responsibility or ability to protect that private interest than it has to protect the real estate owned by a party inside the district. How can the district use the funds paid by all the patrons of the district to protect the private property interest of one member of the district? Further, to assign such responsibility to the board of directors of a district would be to potentially put that board in a position of defending the actions of one private property owner against the actions of another private property owner—a situation that is not the responsibility of the district, but is something to be resolved between the two private parties.

Opponents’ response:  Approval by the district of a person’s conservation proposal is hardly participation. Currently, districts can develop and implement conserved-water projects as part of the district’s trust responsibility to its water users. Stripping the districts of any ownership interest in the water would render them unable to develop and implement conserved-water programs.

Proponents’ answer:  This argument fails to comport with the statutory language of ORS 540.610(3)

Opponents’ response:  Quite frankly, we do not understand the proponents’ argument here. The district’s exemption from forfeiture is specifically defined in ORS 540.612. This provides a specific exemption to the requirements of ORS 540.610(3) cited by the proponents of the bill. Under ORS 540.612, a district can avoid forfeiture of water rights for nonuse inside a district by taking specific actions. The intent of this section is to avoid the loss of water in the district, avoid the related loss of revenues to the district (which loss would increase individual costs of the district patrons) and avoid the loss of transportation water (which loss could result in not being able to move the water to all the irrigators on a ditch). If a district has no ownership interest in water rights, the district would lose the special exemption provided by this section of the statutes and the water could be lost to the district as a result of the landowner’s forfeiture, with negative impacts on the district’s remaining irrigators.

Opponents’ response:  The proponents of the bill are confusing responsibility with ability. The issue originally presented by the bill’s opponents addresses a district’s ability to deliver water to its patrons. If a district has no ownership interest in water rights as a result of the passage of HB 3298-A, the district may no longer be able to use, store or divert water under Oregon water law. If a district cannot divert water, it has no ability to deliver water, without regard to the responsibility that a district has to its patrons. This legislation would create a situation in which a district has a responsibility to deliver water to its patrons but may have no water to deliver. In other words, the district would have no ability to meet its responsibility, no matter what this bill or any other part of the Oregon Revised Statutes states is a district’s responsibility.

Because the focus here is on the rights to use, divert and store water, change of "ownership" implies change of those rights and the associated duties and privileges. If districts no longer have that ownership interest, they will no longer have the rights, privileges and duties associated with the appropriative right to store, divert or use water under ORS 537.130. Instead, the individual landowners in the district would have the rights to use, store and divert water. District relationships would have to be reshaped such that individual patrons contract with the district to use the district’s infrastructure to enable the patrons to use, store or divert water for the benefit of the new owner of the water right.

Opponents’ response:  The clause in the bill cited by the proponents in the above response cannot be construed as dictating the terms of the contract between the district and the federal government, as this would imply that the state of Oregon can dictate the terms of a federal contract to which it is not a party. The real question here is not about the districts’ responsibility to deliver the water; it is about the districts’ ability to deliver the water. For a district that is part of a Bureau of Reclamation project, that ability is directly influenced by the contract between the district and the Bureau for the financing provided by the federal government to develop the project and, in some cases, for the actual water itself when that water comes from a Bureau-owned storage facility.

Each contract between a district and the Bureau of Reclamation is different. The contracts are complex, with detailed requirements imposed on the district by the federal government as a condition of the federal government’s financial participation in the construction of the district infrastructure to divert and transport water for the use of irrigators. In some cases, the federal government has retained an interest in the water rights, which includes having the Bureau listed as on the certificate of a holder of the water right. This bill would divest the federal government of that interest, which, in turn, may put the district’s contract with the Bureau at risk because the district would no longer be in compliance with the terms of the contract. Depending on the terms of the Bureau contract, the district’s inability to divert water (because it no longer holds or owns the water right) may well violate the terms of the federal contract. The district would be unable to meet its contractual obligations—there would be no water to deliver, since the district could not divert the water.

Opponents’ response: Once again, the proponents of this bill are confusing the ability of a district to deliver water to its patrons with the responsibility of the district to deliver water to its patrons. The responsibility of the district to deliver water is inherent and specific in the statutes that created the districts. No one disputes that the districts were created to, among other things, deliver water to their patrons (ORS chapter 545). Nor does anyone dispute that each district has an ongoing responsibility to deliver water to its patrons.

The language from HB 3298-A cited by the proponents simply restates the responsibility of districts to deliver water to their patrons. That responsibility, however, is tempered by the districts’ ability to deliver water. Without financing to implement projects within the district or to make improvements in the district infrastructure, the district may be unable to deliver water. The financial and bonding institutions that provide such financing to districts are private entities that make their financing decisions based on a variety of factors, including a district’s ability to repay the debt or pay off the bonds and the assets of the district that can secure the debt should the district be unable to meet its payment requirements. One sentence in a statute will not and cannot force those private institutions to waive their fiduciary responsibility to their investors by ignoring the available security for the financing they are providing. Nor can such institutions ignore the fact that under this bill, the district would have no ownership interest of any kind in the water rights and thus could provide no assurance to the financing institution of the continued availability of water within the district. That availability is the foundation for the assessments paid by the irrigators to the district, which in turn are the revenues pledged by the district for repayment of its financial obligations.