On March 7, 2013, the Oregon Water Resources Department (“OWRD”) submitted its Final Order of Determination (“FOD”) for the Klamath River Basin Adjudication (“Adjudication”) to the Klamath County Circuit Court.  The FOD is the culmination of a 38-year administrative process, and provides the basis for water rights-based regulation in the Upper Klamath Basin until the Circuit Court has issued a judgment after its trial on exceptions to the FOD that parties may file.  The FOD represents OWRD’s determination of the validity of certain rights to Klamath Basin water diverted or used in Oregon, specifically:  (1) rights under state law based on appropriation prior to 1909 (the year of enactment of Oregon’s water code); and (2) federal reserved rights.  

Among its most significant findings, the FOD recognizes: (a) substantial water rights with “time immemorial” priority for the Klamath Tribes to instream flows in tributaries of Upper Klamath Lake and to water levels in Upper Klamath Lake itself; (b) irrigation rights for diversion and consumptive use for persons owning property within the former Klamath Indian Reservation; (c) state water rights for diversion and use of water in the Klamath Reclamation Project (“Project”) for agricultural purposes, including characterization of interests of the United States, irrigation districts and beneficial users in those water rights; and (d) federal reserved rights for various national wildlife refuges and other federal lands.  The FOD initiates the beginning of the Adjudication’s judicial phase, in which water rights claimants and contestants will have the opportunity to file exceptions to OWRD’s order in Klamath County Circuit Court.

Somach Simmons & Dunn serves as counsel to Project water rights holders in the Adjudication.

Oregon’s Adjudication Process

Since 1909, Oregon law has required that all rights to water by appropriation be acquired through an application for a permit from OWRD or its predecessor agency.  The permits (and certificates issued upon proof of beneficial use under the permits) specify all elements of the rights, including priority date, point of diversion, place of use, and other elements.  Thus, all post-1909 water rights under state law are “determined.”  Rights initiated by pre-1909 appropriation, and federal reserved water rights, are undetermined unless adjudicated through the state’s statutory adjudication procedures.  Oregon Revised Statutes (“ORS”) Chapter 539 outlines the process for determining otherwise “undetermined” claims to surface water.  Like other state adjudications, the process involves the filing of claims, contests, and litigation of the validity of the claims; in Oregon the process includes both an administrative and a judicial phase.  At the completion of the administrative process, OWRD submits its order of determination and record to the Circuit Court of the county where the stream or some part of it is located.  Or. Rev. Stat. § 539.130(1).  In the Circuit Court, claimants may file written exceptions to the proposed findings and order of determination.  Id. § 539.150.  The Circuit Court holds a de novo hearing on any exceptions.
    
Between the issuance of the order of determination by OWRD and the final decree by the Circuit Court, which may be a gap of many years, OWRD is required to regulate water use according to the findings and order.  Or. Rev. Stat. § 539.170.  A party may seek a stay to prevent the OWRD from regulating according to part or all of the order of determination, but to do so it must post bond in an amount set by the Circuit Court, and conditioned on the party paying all damages that may result from the order of determination not being enforced.  Id. § 539.180.  The Circuit Court’s final decision is a final decree that specifies all water rights.  Id. § 539.160.  The decree becomes the basis for regulation of water in the basin, unless it is modified on appeal or on rehearing in the Circuit Court.  Id.  Further appeals, including proceedings in federal courts, are of course possible.   Or. Rev. Stat. § 539.150(4).   U.S. v. New Mexico, 438 U.S. 696 (1978) (allowing United States Supreme Court review of federal reserved rights decided by state supreme court on appeal from a state general stream adjudication); U.S. v. Braren, 338 F.3d 971, 976 (9th Cir. 2003) (holding that federal court evaluation of tribal water rights was not ripe until completion of the state adjudication).  The courts may also send all or portions of the FOD back to OWRD for further investigation.
    
Once court proceedings end, the Circuit Court decree is conclusive as to all prior rights and all existing claimants on the body of water adjudicated.  Or. Rev. Stat. §§ 539.160, 539.200.  The effect of a decree is res judicata as to all parties who were in the adjudication and all water users claiming water rights through those original parties.  Id. § 539.200.

The Klamath Adjudication

The Klamath Adjudication is the most complex adjudication in Oregon’s history, and the first in Oregon to involve determination of federal reserved water rights claims.
    
The United States filed the largest number of claims of any claimant in the proceedings.  Of greatest potential consequence to existing diversions, the United States Bureau of Indian Affairs filed claims on behalf of the Klamath Tribes for instream water levels to protect fisheries on the former Klamath Indian reservation (and the Klamath Tribes asserted those same claims).  Tribal rights in the basin have a significant litigation history.  Most particularly, federal courts have declared that the Klamath Tribes have federal reserved rights to water to support hunting and fishing on former reservation land, and such rights have a priority of “time immemorial.”  The federal courts left the quantification of the rights to the state adjudication process.  U.S. v. Adair, 723 F.2d 1394 (9th Cir. 1983).  The FOD recognizes substantial instream rights for flows in streams traversing the former reservation (including the Wood, Sprague, Williamson Rivers, and tributaries) and rights to elevations of Upper Klamath Lake.  Considerable reduction of junior consumptive uses (primarily irrigation above Upper Klamath Lake) will be necessary in order to provide flows to meet the senior tribal rights recognized in the FOD.

The FOD also recognizes water rights under state law for the Klamath Reclamation Project with a priority of 1905 (and earlier for some limited areas of the Project).  Both the Bureau of Reclamation and the irrigation districts filed claims that obtain water through Project facilities, with the primary difference in the claims based on disagreement over who holds the rights.  The FOD finds that the United States exclusively owns the storage right for the Project, but finds also that irrigation districts and users are holders of rights of use of natural flow and stored waters.

The FOD also recognizes federal reserved rights for national wildlife refuges.  This includes Tule Lake and Lower Klamath National Wildlife Refuges, both of which receive water through Project or Project-related facilities.  These two refuges had claimed the 1905 Project priority for wetland uses on the refuges, but those claims were not upheld because flooding of wetlands was determined not to be within the purpose of the Project or its water rights.  There are recognized, however, federal reserved water rights that are junior to the Project’s state law rights.  

In areas upstream of Upper Klamath Lake, individual members of the Klamath Tribes claimed water rights as Indian allottees for their share of the tribe’s practicably irrigable acreage component of reserved rights.  See Arizona v. California, 373 U.S. 546, 600-01 (1963) (approving the use of practicably irrigable acreage).  Allottees claim an 1864 priority date, rather than time immemorial, for their water rights.  In addition, Walton rights, held by non-Indian successors to Klamath Indian allottees claims, are involved.  Colville Confederated Tribes v. Walton, 647 F.2d 42 (9th Cir. 1981) (declaring that non-Indian successors may step into the shoes of Indian allottees).  Claimants must show a transfer of the land from a Klamath Indian allottee to the claimant’s predecessor in interest, that they began using water within a reasonable time after transfer from allottee ownership, and that they have continued to use water beneficially since then.  Several Walton rights are recognized in the FOD, some claims toWalton rights were not approved, for various reasons.

Next Steps

The Adjudication is assigned to Judge Cameron F. Wogan of the Klamath County Circuit Court.  On March 7, 2013, the Circuit Court issued Case Management Order No. 1, which supplies initial procedures.  The case includes a service list of approximately 1,050 persons, entities, and attorneys that were involved in OWRD’s administrative phase of the Adjudication.  

The state has filed a motion to set an initial hearing date pursuant to Oregon Revised Statutes section 539.300.  The initial hearing date set by the court will also serve as the deadline for filing exceptions to the FOD, after which trial on the exceptions will occur.  In the short-term, it is possible that a party will seek a stay of the FOD pursuant to Oregon Revised Statutes section 539.180.  Otherwise, as discussed previously, OWRD must regulate use based on the FOD.

Conclusion

The submission of the FOD brings to an end the long administrative process for the Adjudication.  While it only begins the judicial process in the Oregon courts, it is highly significant because Klamath water rights in Oregon will be regulated according to the FOD, unless the court grants a stay.  Instream water rights determined for the Klamath Tribes will not be met unless OWRD regulates (curtails) a significant amount of existing irrigation use upstream of Upper Klamath Lake.  Also, the FOD is significant from the perspective of the Project, which has in the past seen its use regulated based on the Endangered Species Act.  With the determination of rights in the Project, Project water users will have an ability to seek water rights regulation outside the Project based on the appropriation doctrine.  These two developments are among those that may result in difficult circumstances in the Upper Klamath Basin due to the first-time enforcement of “first in time is first in right.”

In the meantime, in the background lies the Klamath Basin Restoration Agreement (“KBRA”), approved by approximately 40 parties in 2010.  Based on agreements reached in the KBRA, irrigation water users in the Project will not have their use curtailed as a result of senior tribal rights to water levels in Upper Klamath Lake, at minimum, not until after the court’s decree (potential curtailment thereafter is a function of whether the KBRA is implemented as well as the outcome of the decree).  The KBRA provides a framework for a resolution that would avoid and mitigate impacts of the tribal rights on irrigation areas upstream of Upper Klamath Lake as well, although specific terms of that agreement have not been developed.  At a more fundamental level, the KBRA has not been authorized by Congress and thus cannot be fully implemented.  Thus, in addition to the pending court proceeding, substantial challenges lie ahead.

Copies of the FOD and related materials are available from OWRD at:http://www.oregon.gov/owrd/pages/adj/index.aspx.

For more information on the Klamath Adjudication, please contact Richard S. Deitchman at (916) 446 7979 or by email at rdeitchman@somachlaw.com.   

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