PROTECT THE WATER RIGHTS OF OREGON IRRIGATORS
by Doug Whitsett on HB 3298-A

Water rights are very valuable property rights. A water right certificate vastly increases the value of irrigated crop-land, especially in Eastern Oregon. For instance, according to Klamath County tax documents, class 2 irrigated crop-land is taxed on the basis of about $600 per acre. Identical quality dry crop-land is taxed on the basis of about $25 per acre. Although according to county real estate records the real market value of the land is much higher, the value ratio remains virtually constant. Water rights are purchase with the irrigated land, sold with the land, and certainly taxed with the land. The value of the water right represents the preponderance of the equity in irrigated land that is used as collateral for property mortgages. The fact is that the water right appurtenant (attached) to Eastern Oregon irrigated land represents more than 95% of its value.

Oregon water law has consistently upheld the ownership of a water right by the owner of the land to which the water right is appurtenant. Relevant Oregon case law clearly states that water rights held by irrigation districts are owned by the owners of the land to which the water right is appurtenant and to where the water is actually put to beneficial use. Relevant Federal law clearly states that water rights held by the Bureau of Reclamation (BOR) are owned by the owners of the land to which the water right is appurtenant and to where the water is actually put to beneficial use. Oregon and Federal law have consistently stated that both water districts and BOR projects that hold water rights hold those water rights in trust for the land owner to which the water right is appurtenant and to where the water will be put to beneficial use. The only exception is where a water district or a BOR project actually owns the land to which the water right is appurtenant.

organization representing most of Oregon’s water districts. Since at least 1999 the OWRC has continued a concerted effort to change the statutory and regulatory framework of Oregon water law in order to grant irrigation districts greater control over water rights within irrigation districts. A paper was presented at OWRC’s 1999 legislative seminar entitled " Legislative Changes Regarding Water Quality, Irrigation District Formation, and Water Rights Ownership". That same year OWRC’s proposal to the Oregon Water Resources Department (OWRD) for rule changes were rejected when both the Attorney General (AG) and the OWRD concluded that the water districts neither own nor co-own water rights that they hold for their members. Not dissuaded, OWRC proposed HB 2539 in the 2001 Oregon Legislative Session that appeared to claim ownership by the districts of water rights appurtenant to the land of landowners within the district. This effort died in committee when the legislators rightfully refused to transfer ownership of private property water rights to water districts by legislative fiat.

In order to resolve this issue and to provide certainty to water users HB 3298 was introduced in the 2003 Oregon Legislative Session. HB 3298 affirms that landowners within irrigation districts own irrigation rights appurtenant to their land, and that irrigation districts own irrigation water rights appurtenant to lands owned by the district. HB 3298 does not affect other types of water rights. This legislation became necessary because some irrigation districts have been claiming for the past five years that they either own or co-own their members’ water rights. They have continued to promote this erroneous claim even though it has been rejected on its merits by the OWRD, the Oregon AG, and the 2001 Oregon House Committee on Water.

As expected, the OWRC and many of its water district members are bitterly opposed to HB 3298. Their oral and written objections are prolific and varied but generally fall under four main objections.

First, they claim that HB 3298 would change the ownership of water rights for Districts that currently "hold" water right certificates. This allegation is not factual. The only water rights that water districts in Oregon have ever owned are those water rights appurtenant to land owned by the districts. The water districts have never owned the water rights that they hold in trust for their members. Both Oregon Statute and Oregon case law clearly state that a water district holds all property acquired by it solely in trust for its members for the purpose of improvement by irrigation of the lands within the district. The property can be diverted to no other use.

Second, they claim that owners of water rights will vacate the water districts making the continued operation of the district economically unfeasible. However, Oregon law clearly states that once a water district is formed,

land-owners can not withdraw from the water district without the final decision and approval of the water district. Even if a district chose to allow the withdrawal of a landowner’s land and appurtenant water right, the land- owner would still be required by Oregon law to continue to pay his share of all assessments and indebtedness acquired previous to his withdrawal.

Third, they claim that this legislation will financially jeopardize Districts with long-term obligations to private and federal lenders. However, Oregon statute clearly states that land owners within a water district are responsible for all debt obligations incurred by the water district. On the other hand, if the water districts were allowed to establish ownership of the members’ water rights, the members could then be in financial jeopardy to their private and federal lenders because more than 90% of the equity in their irrigated property resides in those water rights.

Fourth, within the Klamath Basin the allegation is made that legislation that reaffirms the ownership of water rights by the land owner to which the water right is appurtenant somehow jeopardizes the ongoing takings case in the Federal Court of Claims. Yet in that court action under "First Claim for Relief Taking of Water Rights Without Just Compensation" at line 32.) "All of the water rights described herein are appurtenant to the land, and are recognized as property under the laws of the states of Oregon and California, respectively. Such property rights may not be taken for public use without payment of just compensation". This statement appears to allege ownership of the water right by the owner of the land to which the water right is appurtenant. Confirming this allegation, the United States Supreme Court in Nevada v. United States determined that the government, at most, has a nominal ownership interest in the water rights held by the BOR: the beneficial interest is owned by the owners of the land within the Bureau project to which the land is appurtenant. Black’s Law Dictionary defines nominal to mean "in name only".

Some confusion may exist among water right owners in Oregon and in California. Although Oregon’s water law was initially structured similar to California’s Wright Act, current water law in the respective states has diverged significantly since that time. California water law has evolved to establish a measure of water right ownership in water districts that hold the water rights. On the other hand, Oregon water law has evolved to establish ownership of a water right in the owner of the land to which the water right is appurtenant regardless of what entity actually "holds" the water right.

HB 3298 is a property rights issue. The measure and the limit of the proposed legislation is to codify into Oregon Statute that which has been established in Oregon courts. The bill is based on attorney general opinions and case law declaring that Oregon landowners with rights to use water for the beneficial purpose of irrigation own those appurtenant water rights.

HB 3298 does not change the ownership of Oregon water rights: rather, it reaffirms in statute that the owner of the water right is the owner of the land to which that water right is appurtenant.

HB 3298 was introduced into the 2003 Legislative Session at the request of Water For Life, Inc. Water For Life is a not for profit corporation formed in 1990 to promote and to protect the interests of agricultural water users. Its several hundred contributors consist primarily of farmers and ranchers, and businesses that support, and are supported by, farmers and ranchers.

Doug Whitsett D.V.M.

President, Water For Life, Inc.

P.O. box 12248, Salem, OR 97309-0248

(503) 375-6003 office

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