At the Confluence: Oregon's Instream Water Rights Law in Theory and Practice

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COMMENTS
AT THE CONFLUENCE: OREGON’S INSTREAM WATER
RIGHTS LAW IN THEORY AND PRACTICE
BY
ROBERT DAVÍD PILZ∗
Water law has two important dimensions. The first is theoretical—
in textbooks, treatises, statutes, administrative codes, and case law.
Here, the law is portrayed as a technical system for the distribution and
use of a scarce natural resource. More importantly though, water law is
manifest in the rivers themselves where gravity, precipitation, and
climate govern, ignoring the demands of legislators, judges, and
bureaucrats. The practice of manipulating and distributing water in the
real world is fraught with practical difficulties and tough policy
choices. Understanding this dual existence is essential because the law
as written often looks vastly different from the water it purports to
distribute. Nowhere is the dichotomy more obvious than in the
regulation of instream water rights. On paper, instream rights are the
legal equal of any other right to use water in Oregon. In practice,
however, applications to transfer consumptive uses instream are met
with skepticism and are often held to a different standard. A deeper
understanding of the context and origins of this skepticism, and of the
standard itself are necessary to achieve greater streamflow protection
without sacrificing respect for established water use. This Comment
illustrates the confluence where the law of instream rights meets the
realities of water regulation in Oregon. It explores both the challenges
facing streamflow protection and creative solutions to address these
challenges. As the first state in the country to enact positive law on
∗ © Robert Davíd Pilz, 2006. J.D. May, 2006, Lewis and Clark Law School; B.A. May 2002,
Colorado College. Davíd is currently working as a Project Manager for the Oregon Water Trust
in Portland, Or. The Comment was written before Davíd was hired at the Oregon Water Trust
and the views expressed herein do not reflect the official position of that organization.

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instream water rights, Oregon is a model for other western states. With
this in mind, a careful examination of Oregon’s experiences will help
guide policy choices not only in Oregon but also throughout the West.
I. INTRODUCTION...................................................................................................1385
II. OREGON WATER LAW: FIRST IN TIME, FIRST IN RIGHT ....................................1386
A. Instream Water Rights
............................................................................1386
B. Nuts and Bolts: On the Ground Regulation of the Right to Use
Water in Oregon
.......................................................................................1388
C. The Mechanics of Leaving Water Instream
.........................................1389
D. The “No Injury Rule”
...............................................................................1389
1. The Property Right in Water
..........................................................1390
2. Context for Application of the Rule in Oregon: Transfer
Proceedings
.......................................................................................1390
3. Defining Legal Injury
.......................................................................1391
4. Contours of the Rule Part I: Legal Definitions of Return Flow
......1392
5. Contours of the Rule Part II: Hydrologic Definitions of
Return Flow
......................................................................................1393
III. OBSTACLES TO INSTREAM FLOW PROTECTION .................................................1395
A. Practical Limitations
...............................................................................1395
B. “Creative” Administrative Challenges to Instream Transfers
...........1397
1. ENAF Is Enough?: Estimated Average Natural Flow as a
Ceiling for Instream Rights
.............................................................1397
2. Another “Beneficial Use” Ceiling
...................................................1399
3. NOT “Ready, Willing, and Able?”: A Creative Application of
the Forfeiture Law
...........................................................................1401
C. Formal Opposition to Instream Transfers
...........................................1402
1. Big Trouble on Little Creek: The Water Trust’s Contested
Case Hearing
.....................................................................................1403
a. Regulation of Junior Rights Is Not Legal Injury
...................1405
b. Water Right Transfers in Oregon Begin with the
Presumption that the Entire “Paper” Right Is
Transferable
..............................................................................1405
c. A Water Right Holder Is Not Entitled to the Undiverted
Portion of Another Right Holder’s Water
...............................1406
d. Changing the Historic “Shape” of a Water Right Is Not
Injury If the Change Is Within the Extent Allowable
Under the Right
.........................................................................1406
e. Continued “Subirrigation” from Adjacent Lands After an
Instream Transfer Does Not Constitute Enlargement
..........1407
f. Efficiency of a Water User’s Conveyance System Is Not
an Injury Consideration
............................................................1408
2. Imposing the “No Injury Rule” Come Hell or High Water:
Watermaster Opposition
.................................................................1409

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a. The Standard for Proving Return Flow Requires More
Than Mere Speculation
............................................................1412
b. Timing of Return Flow Must be Taken into Account
.........1412
c. Instream Applicants Should Pay Close Attention to
Irrigation Season Limitations
.................................................1412
d. Return Flow Entering the River at a Point Above a
Downstream Junior’s POD Should be Subtracted to the
Extent of Potential Injury
........................................................1413
IV. ACHIEVING STREAMFLOW PROTECTION BY MODELING SUCCESS ....................1413
A. A Measurement Model: Washington’s Measurement
Requirement
........................................................................................1414
B. Austin Ranch: Changing Use Without Risk of Injury
.........................1415
C. Private, Market Solutions on the Lostine River
..................................1417
V. RECOMMENDATIONS FOR THE FUTURE.............................................................1418
A. First-Tier Recommendations
.................................................................1418
1. Enact a Comprehensive Measurement Requirement
.................1418
2. Treat Instream Transfers Equally with Consumptive Uses
in Transfer Proceedings
.................................................................1419
B. Second-Tier Recommendations
............................................................1419
1. Strive for Creative Solutions Within the Existing Legal and
Regulatory Regime
...........................................................................1419
2. Look for Private Solutions
..............................................................1420
VI. CONCLUSION ......................................................................................................1420
I. INTRODUCTION
This Comment explores streamflow protection issues as they intersect
and conflict with existing water regulation practice in the state of Oregon.
Numerous factors make the protection of streamflows for ecological benefit
difficult. These factors include: the practical limitations of managing a
complex and unpredictable natural system; the administrative reluctance
stemming from local opposition to non-consumptive uses and years of
enforcing the status quo; and the formal, legal opposition on the part of
those who fear that protecting streamflows will interfere with their own
rights. The difficulties represent not only conscious choices but inhere in the
antiquated doctrines of Western water law. This Comment explores
particular impediments to streamflow protection raised by the prohibition
against
legal
injury to others’ water rights. By illuminating the practical,
regulatory, and legal parameters of injury analysis and superimposing this
framework on the realities of Oregon’s administrative and legal regulation of
streamflow, this Comment seeks to assist parties in navigating the
complexities of instream transfers. Outside of Oregon’s state lines, the hope
is that this analysis will aid parties in other western states and the states
themselves, as they develop streamflow protection laws and policies.

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The Comment begins with an overview of Oregon’s streamflow
protection laws and the administrative and regulatory processes designed to
apply the law on the ground.1 Next, the prohibition against injury to existing
water rights is examined in detail.2 With this background in mind, the
practical,3 administrative,4 and legal5 challenges to implementing
streamflow protection are discussed. Central to this Comment is the analysis
of these challenges and the questions they raise—are they based in sound
law and policy? Do they treat streamflow protection on an equal legal
footing with other types of water use? What can be learned from a close
examination of these hurdles? Finally, the Comment concludes with a
discussion of successful models of streamflow protection and a summary of
recommendations for the future.
II. OREGON WATER LAW: FIRST IN TIME, FIRST IN RIGHT
Because water in the arid West is a limited resource, a system for
distributing it during times of shortage has become an entrenched part of
Western law.6 This law is called the “prior appropriation doctrine.” The most
basic tenet of the doctrine is that the first person to appropriate water from
a source has the most senior right and will therefore be the last appropriator
cut off during times of shortage.7 Conversely, later appropriators, called
juniors, will be required either to shut off or diminish the amount of their
diversions during shortages to leave water in the river for the seniors.8
A. Instream Water Rights
Oregon was one of the first states in the West to protect water instream
when it removed streams feeding waterfalls in the Columbia River Gorge
from appropriation to protect the streams’ “scenic beauty.”9 This step was
followed by the establishment of minimum perennial stream flows in 1955.10
1
Infra
Part II.A.
2
Infra
Part II.B
.
3
Infra
Part III.A.
4
Infra
Part III.B.
5
Infra
Part III.C.
6 The following section is meant as an introduction to water law in general and Oregon’s
laws in particular. This background is provided to widen the appeal of this Comment beyond
those already knowledgeable in water law. The author hopes this Comment can be a guide for
both the uninitiated and experienced professionals.
7
See
Low v. Rizor, 37 P. 82, 84 (Or. 1894) (discussing prior appropriation doctrine); Cole v.
Logan, 33 P. 568, 569 (Or. 1893) (holding that plaintiffs, who began diverting water two and a
half years after defendants, “made their diversion and appropriation subject” to defendant’s
right).
8
Cole
, 33 P. at 569.
9 Act of Feb. 9, 1915, ch. 36, 1915 Or. Laws 49 (codified as amended at OR. REV. STAT.
§ 538.200 (2005)).
10 Act of May 26, 1955, ch. 707, 1955 Or. Laws 924 (codified as amended at OR. REV. STAT.
§ 536.235 (2005)). Minimum perennial stream flows were set by administrative rule and were
not considered equal to certificated appropriations of water. However, they were nonetheless

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Minimum flow protection had limited effect, however, because the flows
took precedence only over appropriations later than 1955. In 1987, the
Oregon legislature took the final step toward meaningful instream protection
by creating a legal right to maintain streamflows. The Instream Water Rights
Act11 (the Act) begins by declaring that instream uses are beneficial uses12
and have an equal legal footing with “any other water right for which a
certificate has been issued.”13
Instream rights are created in several ways. First, the Act converted the
minimum perennial stream flows set in 1955 to instream rights with a
priority date according to the date the minimum flow was established.14
Because of the late priority dates of these rights, however, their importance
is minimal. Instream rights can also be created by state agencies. The
Oregon departments of Fish and Wildlife, Environmental Quality, and Parks
and Recreation are empowered to request instream rights for public use.15
Again, these rights post-date the 1987 Act and are therefore at the back of
the prior appropriation line.16 The only method of creating senior instream
rights, and therefore the most important method, is the purchase, lease, or
gift of a water right by a private party for conversion to instream use.17
Existing water rights of any seniority may be leased for temporary
conversion to an instream use or may be sold for permanent conversion.18
Short-term leases are by far the most popular of these options and are
therefore the primary vehicle in Oregon for creating instream rights.19
binding on appropriations made subsequent to their creation.
See id.
at 927–28 (stating that in
formulating the water resource program the board must consider the maintenance of minimum
perennial streamflows).
11 OR. REV. STAT. §§ 537.332–537.360 (2005).
12
See
id
. §
537.334 (“Public uses are beneficial uses.”).
13
Id.
§ 537.350.
14
Id.
§ 537.346.
15
Id.
§ 537.336. Public uses depend on the agency applying for the instream right and
include maintaining and improving fish habitat, protecting and maintaining water quality, and
public recreation and scenic uses.
16 For other commentary on the shortfalls of Oregon’s early attempts at instream
protection, see Scott B. Yates, Comment,
A Case for the Extension of the Public Trust Doctrine
in Oregon
, 27 ENVTL. L. 663, 669–72 (1997).
17
OR. REV. STAT.
§ 537.348 (2005);
see
Joseph Q. Kaufman,
An Analysis of Developing
Instream Rights in Oregon
, 28 WILLAMETTE L. REV. 285, 289–97 (giving a detailed analysis of the
genesis of instream rights in Oregon).
18 OR. REV. STAT. § 537.348 (2005).
19
See
OREGON WATER TRUST, 2004 ANNUAL REPORT 4 (2004),
available at
http://www.owt.
org/images/OWT%202004%20Annual%20Report.pdf (showing the popularity of short-term
instream lease agreements compared to long-term and permanent deals brokered by the Oregon
Water Trust from 1994 to 2004). The Oregon Water Trust , founded in 1993, specializes in
cooperative, scientific, and market-based solutions to restore streamflows in priority streams
across Oregon. For a detailed description of the Oregon Water Trust’s beginnings and methods,
see Janet C. Neuman & Cheyenne Chapman,
Wading into the Water Market: The First Five
Years of the Oregon Water Trust
, 14 J. ENVTL. L. & LITIG. 135, 139–48 (1999) and Janet C.
Neuman,
The Good, the Bad and the Ugly: The First Ten Years of the Oregon Water Trust
, 83
NEB. L. REV. 432, 442 (2004).

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Short-term lease agreements are not to exceed five years.20 These
agreements allow landowners, who are unwilling to transfer their rights
instream permanently, the freedom to do so for a trial period. In addition,
landowners who are not using water, and are therefore at risk of forfeiting
their right, can lease the right instream, stopping the clock on forfeiture by
putting their water to “use.”21 Instream lease agreements also enjoy the
freedom to split the season between instream and out-of-stream uses.22
B. Nuts and Bolts: On the Ground Regulation of the Right to Use Water in
Oregon
In practical terms, the “first in time, first in right” priority system is
difficult to administer.23 Two primary impediments to meaningful regulation
of water rights are a lack of accurate measurement of diversions and a lack
of resources to direct towards enforcement efforts.24 State employees called
watermasters, whom the director of the Oregon Water Resources
Department (OWRD) appoints, carry out on-the-ground regulation of water
rights in Oregon.25 Oregon is divided into twenty-one districts roughly
following watershed boundaries.26 Watermasters and their staff are charged
with the general duty of distributing water among users according to their
rights.27 As part of their duty to oversee the distribution of water,
watermasters are also charged with preventing wasteful practices.28
However, actions by the state of Oregon against wasteful water users are
rare and only occur in extreme instances of waste.29
20 OR. ADMIN. R. 690-77-0077(1) (2006).
21
Id.
22 OR. REV. STAT. § 537.348(3) (2005). The Oregon Water Resources Department (OWRD)
approves “split-season” leases with several conditions regarding the use of water: first, the
existing water use and the instream use cannot be concurrent; second, for rights with defined
seasons of use, the “split” is limited to one existing use period and one instream period, while
for year-round rights, the “split” can include two existing use periods and one instream period.
OR. ADMIN. R. 690-077-0079(2)(b)(A)–(B) (2006). Additionally, the holder of a split season lease
must measure and report the amount of water withdrawn for the existing use to OWRD.
Id.
at
690-077-0079(3).
23
See generally
RICK BASTASCH, WATERS OF OREGON: A SOURCE BOOK ON OREGON’S WATER
AND WATER MANAGEMENT 115–20 (Or. State Univ. Press, 1st ed. 1998) (describing enforcement
of Oregon’s water laws).
24 Karen A. Russell,
Wasting Water in the Northwest: Eliminating Waste as a Way of
Restoring Streamflows
, 27 ENVTL. L. 151, 157 (1997).
25 OR. REV. STAT. § 540.020(1)–(2) (2005).
26
See
State of Oregon, Water Resources Department, Region/Watermaster Map,
http://www.wrd.state.or.us/OWRD/offices.shtml#Region_Watermaster_Map (last visited Nov.
12, 2006) (showing Oregon’s water regions and watermaster districts).
27 OR. REV. STAT. § 540.045 (2005).
28 Bennet v. City of Salem, 235 P.2d 772, 778 (Or. 1951).
29 Russell,
supra
note 24, at 173.

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C. The Mechanics of Leaving Water Instream
Maintaining flows instream requires a watermaster to regulate—i.e.
reduce or shut off completely—the point of diversion (POD) of out-of-
stream appropriators junior to the instream right, thereby allowing the
proper amount of water to flow in the river. Though simple in theory,
achieving instream flow requires careful planning and intimate knowledge of
the river system. Instream rights are defined and protected as either points
or reaches.30 When an instream flow is protected at a point, the watermaster
is charged with ensuring that at least as much water as is called for by the
instream right passes that point. The preference, however, is that instream
rights be defined as “river reaches.”31 In general, a senior instream right that
has been acquired from an existing user and that is protected as a reach is
maintained from the old POD—where the landowner once diverted water
out of the river—to the mouth of the river.32 Instream rights can also be
separated into several reaches, each with a different instream rate, to
mitigate against injury to other users or to account for natural conveyance
losses.33 If mitigation for loss of return flow is necessary, the instream right
will be reduced by the amount of return flow at the point where return flow
previously entered the stream. If this point cannot be identified, the right
will be reduced at the old POD.34 Alternatively, if a river passes through a
reach where natural flow losses occur by seepage from the river bottom, the
instream right will be reduced to reflect this natural decrease.35
The preceding discussion highlights the importance state regulators
place on protecting existing rights from interference by instream rights.
Before an instream right is created, either by request from a state agency or
by conversion from an existing right, OWRD analyzes the proposal for
potential injury to other users. The doctrine controlling this review is called
the “no injury” rule. It has deep roots in Western water law and is the forum
for a majority of the challenges faced by applicants for streamflow
protection. This comment focuses on application of the doctrine in the
context of an existing user who wishes to transfer their right instream.
D. The “No Injury Rule”
Under the no injury rule, junior appropriators are protected by
maintenance of the stream conditions that existed at the time of their
30 OR. ADMIN. R. 690-077-0015(6)–(7) (2006).
31
Id.
at
(6).
32
Id.
at (7). If the protected amount is an identifiable portion of the river into which the
source river flows, the instream reach can be extended into that river.
33 OR. ADMIN. R. 690-077-0075(2)(b) (2006).
34
Id
. at (2)(c). For example, if known return flow of 1.0 cubic foot per second (cfs) returns
to the river one mile below the old point of diversion, the instream reach will be divided at the
point where the return flow reenters the river. In the reach above that point, the entire instream
right will be protected, while below that point, 1.0 cfs less will be protected to allow that water
to flow to juniors.
35
Id
. at (2)(b)(D).

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appropriation.36 These conditions are not limited to natural conditions but
include anthropogenic stream influences such as water returning to the river
from an irrigated field.37 Understanding the rule requires a step-by-step
explanation beginning with a description of the nature of the property right
in water, a discussion of the context in which the rule is applied, and, finally,
an in-depth discussion of the legal and practical contours of the rule itself.
1. The Property Right in Water
Once a water right has been issued by OWRD, the right to use the water
becomes a fully vested property interest.38 Like an owner of real property,
appropriators are entitled to enjoy their right free from injury by other
property owners. However, the comparison to real property ownership only
goes so far because a water right, while a vested property right, is limited to
a right of use.39 “Ownership” of Oregon waters lies with the people of
Oregon.40 The no injury rule therefore preserves juniors’
use
of water rather
than their
ownership
.
2. Context for Application of the Rule in Oregon: Transfer Proceedings
Application of the no injury rule is most common in proceedings
called “transfers,”41 where decisions can be made to change from one
water use to another or from a specific place of use to a new location such
as in-stream. The key question in transfers is how much of the water right
may be transferred. Oregon is called a “paper right” state because transfers
begin with the assumption that the entire certificated amount is
transferable.42 Other western states define water subject to transfer based
on historical patterns of use.43 In these states, if a user historically used
36 Williams v. Altnow, 97 P. 539, 540 (Or. 1908). This rule pervades Western water law.
See
Eglar v. Baker, 4 Alaska 142, 144–45 (D. Alaska 1910) (applying the no injury rule in Alaska);
Gassert v. Noyes, 44 P. 959, 962 (Mont. 1896) (stating that “the rights of each are to be
determined by the condition of things at the time . . . [of] appropriation”); Farmers Highline
Canal v. Golden, 272 P.2d 629, 631 (Colo. 1964) (stating that “junior appropriators have vested
rights in the continuation of stream conditions as they existed at the time of their respective
appropriations”).
37
See
Hough v. Porter, 98 P. 1083, 1109 (Or. 1909) (holding that changing the location of a
water right use is impermissible if the change substantially injures the water rights of others,
such as if the change causes runoff to return to a stream below the point where it is normally
diverter by another water user).
38
See
Hale v. Water Res. Dep’t of State, 55 P.3d 497, 499 (Or. Ct. App. 2002) (explaining that
“[a] person whose application for a permit has been granted [by the OWRD] may then apply for
a water rights certificate that essentially vests in the applicant a permanent water right”).
39 Sherred v. City of Baker, 125 P. 826, 830 (Or. 1912)
.
40
See
OR. REV. STAT. § 537.110 (2005) (stating that “[a]ll water within the state from all
sources of water supply belongs to the public”).
41
See generally
COMM. ON W. WATER MGMT., WATER TRANSFERS IN THE WEST: EFFICIENCY,
EQUITY, AND THE ENVIRONMENT, 70–76 (National Academy Press ed., 1992) (explaining the no
injury rule and water transfers).
42
See
OR. REV. STAT. § 540.505(4)(a)–(d) (2005) (“Water use subject to transfer.”).
43
See, e.g.
, COLO. REV. STAT. § 37-92-302(2)(a) (2006) (requiring a transfer applicant to

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less than their allotted right, that pattern of use defines the permissible
future use of the right.
Despite the “paper” status of Oregon water rights, appropriators in
Oregon can nonetheless lose some or all of their water right through
historical non-use.44 Non-use of water for a period of five or more years
creates a rebuttable presumption of forfeiture.45 However, Oregon law
exempts from forfeiture any water right under the following circumstance:
if the owner of a . . . water right uses less water to accomplish the beneficial
use allowed by the right, the right is not subject to forfeiture so long as (a) [t]he
user has a facility capable of handling the entire rate and duty authorized under
the right; and (b) [t]he user is otherwise ready, willing and able to make full use
of the right.46
In other words, no forfeiture results from using less than the “paper right” if
the user is ready, willing, and able to use the full amount. The critical impact
of this law is that downstream juniors, who historically depended on the
unused portion of an upstream senior’s right, are not legally
entitled to that
water if the senior meets the “ready, willing, and able” requirement.47
Under this doctrine, the face of the water right certificate is the first
place to look at the beginning of a transfer proceeding. The parties then
must work from this amount to determine how much water can be
transferred without injury.
3. Defining Legal Injury
OWRD bars transfers when there is a determination that the change will
injure other water users.48 In Oregon, injury occurs when an “existing water
right [is] not receiving previously available water to which it is legally
entitled.”49 Another species of legal injury, enlargement, occurs when a
water right is expanded beyond what is set out in the certificate.50 The crux
provide, among other things, a map which shows the historical use of the rights);
see
WASH.
REV. CODE § 90.03.380(1) (2005) (stating that a transfer may not result in an “increase in the
annual
consumptive
quantity of water used under the water right” (emphasis added)). In these
states, if appropriators used less water than their certificate allowed, they may only transfer the
amount they were using and will lose the right to the remainder of water authorized under the
certificate.
44 OR. REV. STAT. § 540.610(1) (2005) (explaining that “[w]henever the owner of a perfected
and developed water right ceases or fails to use all or part of the water appropriated for a
period of five successive years, the failure to use shall establish a rebuttable presumption of
forfeiture of all or part of the water right”).
45
Id.
46
Id.
§ 540.610(3)(a)–(b). This law is referred as the “limited forfeiture” law.
47
See infra
Part III.C.1.c (describing the impact of the “ready, willing, and able” language in
transfer proceedings);
see also
Krista Koehl,
Partial Forfeiture of Water Rights: Oregon
Compromises Traditional Principles to Achieve Flexibility
, 28 ENVTL. L. 1137, 1149–50 (1998)
(critiquing this feature of Oregon law).
48 OR. ADMIN. R. 690-380-5000(1)(d) (2006).
49 OR. ADMIN. R. 690-380-0100(3) (2006).
50
Id.

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of the injury analysis is determining what water was “previously available”
and, thereby, what water juniors are
legally
entitled to. The question of what
water was “previously available” is decided using the doctrine of “return
flow.” The concept of return flow is often confused with similar terms and
physical phenomenon. Understanding the doctrine therefore requires
familiarity with both legal and scientific concepts of return flow.
4. Contours of the Rule Part I: Legal Definitions of Return Flow
Oregon courts have adopted the definition of return flow as water that
returns to the natural course of the stream from which it was taken after
being applied by an appropriator.51 “Possession” of water lasts until it
“wastes back or percolates from lands . . . or leaves the control of the owner
of such lands.”52 Stated differently, discharging excess irrigation water back
into its source after use, absent the intention of recapture or reuse, effects
an abandonment.53 Downstream users are then free to appropriate the
returned water.54
Two similar situations confuse the doctrine. First, if the appropriator
recaptures the water on her land before it rejoins its source, the water does
not become “return flow.”55 The appropriator has not lost control nor
effectively abandoned the water. Second, if the water finds its way onto
adjacent lands or into a ditch or stream other than its original source after
application, the “return flow” label does not attach. Appropriators who rely
on this water, called “seepage” or “waste water,” cannot compel
continuation of the irrigation practice that results in the seepage.56 The key
‘Enlargement’ means an expansion of a water right and includes, but is not limited to:
(a) Using a greater rate or duty of water per acre than currently allowed under a right;
(b) Increasing the acreage irrigated under a right; (c) Failing to keep the original place of
use from receiving water from the same source; or (d) Diverting more water at the new
point of diversion or appropriation than is legally available to that right at the original
point of diversion or appropriation.
Id.
51 Jones v. Warmsprings Irrigation Dist., 91 P.2d 542, 546–47 (Or. 1939).
52
Id.
at 548.
53
Id.
at 547.
54
Id.
at 548.
55
See
Cleaver v. Judd, 393 P.2d 193, 195 (Or. 1964) (“[I]f the waste and seepage water is
recaptured for reuse within the boundaries of the district, those who have previously used such
waters have no cause of action for having been deprived of the water.”).
56 Vaughan v. Kolb, 280 P. 518, 521 (Or. 1929).
[A] claimant to wastewater acquires a temporary right only to whatever water escapes
from the works or lands of others, and which cannot find its way back to the natural
stream from which it was taken; that such a use of water does not carry with it the right
to any specific quantity of water . . . and the appropriators are under no obligation, nor
have they the right to permit any specific quantity of water to be discharged as “waste
water” for his benefit.
Id
.

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difference in this scenario is that the water has yet to commingle with its
natural source and is therefore not legally appropriable.
Once defined as return flow, however, water is appropriable by
downstream water users and “can not afterward be taken out by the original
appropriator to the injury of other rights which have attached and vested to
it.”57 In other words, an upstream senior may not deprive downstream
juniors of return flow by changing the use of water on her land or by
changing the point of return of used water to the river below the
downstream junior’s point of diversion.58 As is often the case, using broad
legal definitions risks oversimplifying reality. In the field, return flows are
difficult to identify and differentiate from “seepage” or water destined for
recapture and even more difficult to quantify.
5. Contours of the Rule Part II: Hydrologic Definitions of Return Flow
For the purpose of understanding return flow in the context of injury
analysis, the most important hydrologic processes are those that remove
water from the system—“consuming” water—or that result in water
returning to its source and becoming return flow. The movement of water
through soil after being applied for irrigation is controlled by two processes
known as infiltration and redistribution.59 Infiltration is the process whereby
water percolates into the soil.60 Redistribution refers to the movement of
water once it has entered the soil.61 The rate at which water infiltrates from
the surface into the soil depends on many factors. These factors include the
rate of application of irrigation water, the hydraulic conductivity of the soil,
the degree of saturation of the soil, the inclination and roughness of the soil
surface, the chemical characteristics of the soil surface, and the physical and
chemical properties of water.62 Once water infiltrates the soil, redistribution
is controlled by gravity, pressure, and evapotranspiration from vegetation.63
On an irrigated field, evapotranspiration is the most significant
redistribution force and is particularly important in the return flow analysis
because it represents the amount of water that does not become return flow.
57
Jones
, 91 P.2d at 546.
58 Hough v. Porter, 98 P. 1083, 1109 (Or. 1909).
[I]f by changing the place of use, when the water is needed by others, the quantity
returning to the stream after changing the place of use as compared to its previous
application is substantially diminished, or if, by reason of such change, the “run off”
reverts to the stream or channel below the point diverted by another, thereby reducing
the supply at such point, it must necessarily operate to the injury of the rights of such
other party . . . .
Id
.
59 S. LAWRENCE DINGMAN, PHYSICAL HYDROLOGY 220 (Prentice Hall 2d ed. 2002).
60
Id.
61
Id.
62
Id.
at 246.
63
Id.
at 265.

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Evapotranspiration describes a number of processes by which liquid or
solid water becomes water vapor.64 Among these processes, transpiration is
particularly important. Transpiration is the process by which water is taken
from the soil by plants, moved through the vascular system of the plant and
evaporated into the atmosphere.65 Predictions of the rate at which
transpiration occurs in crops are an important tool irrigators use to
determine how much water to apply to their field. 66
Water transpired by an irrigated field represents water that will not
become return flow—water that is “consumed,” in other words.
Watermasters often rely on this figure alone to calculate return flow. They
subtract “consumptive use” from the total amount of water the irrigator is
diverting and label the difference return flow. The assumption is that all
water not consumed returns to the river and is used by downstream water
rights. This oversimplifies the analysis however, because redistribution
processes other than transpiration also result in consumption of water.67 For
instance, water flowing through an unlined, dirt irrigation ditch can escape
the system either through surface evaporation or through infiltration and
redistribution into the groundwater system.68
Some water applied to the field and not consumed by plants or surface
evaporation percolates into the ground and mingles with groundwater.69
Most groundwater is connected to a surface water source such as a river or
lake.70 This hydraulic connectivity between ground and surface water is the
basis of return flow. However, many variables control the amount and timing
of groundwater movement into surface bodies. In discussing return flow and
injury, therefore, timing of return flow is a critical factor.71
Timing varies depending on the hydraulic conductivity, hydraulic
gradient, and flow direction of the soil and groundwater at issue.72 Hydraulic
64
Id.
at 272.
65
Id.
at 294.
66 RICHARD H. CUENCA ET AL., OREGON CROP WATER USE AND IRRIGATION REQUIREMENTS 2
(1999). The rate of transpiration for crops in Oregon, crop ET, is modeled by multiplying the rate
of transpiration from a reference crop by a specific crop factor. The reference crop used is
green grass, disease and weed free, uniform in height and well-watered. The crop factor
represents the transpiration rate of specific Oregon crops in relation to the reference crop. In
other words, crops which transpire faster than the reference crop result in a crop factor
multiplier greater than the reference crop while crops which transpire slower result in a
multiplier less than the reference crop. The result of multiplying the reference crop by the crop
factor gives the crop water requirement. The difference between this number and the effective
precipitation of a given region gives the net irrigation requirement of a given crop in a given
location. Transpiration is affected by climate factors such as wind, heat, humidity and length of
day. High winds and heat combine to increase transpiration while high humidity lowers the
effective pressure differential inside and outside the plant, decreasing ET.
Id.
67
See
DINGMAN,
supra
note 59, at 220 (listing exfiltration, capillary rise, recharge, interflow,
and percolation as examples of redistribution processes).
68 DRAFT EVALUATION LAMPSON INSTREAM PROPOSAL WALLA WALLA RIVER 5 (Apr. 21, 2005)
[hereinafter LAMPSON INSTREAM PROPOSAL] (on file at the Oregon Water Trust).
69
Id.
70 DINGMAN,
supra
note 59, at 325.
71 LAMPSON INSTREAM PROPOSAL,
supra
note 68, at 8–9.
72
Id.
at 9.

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conductivity is the rate at which water moves through the soil and varies
depending on the soil-grain size.73 The hydraulic gradient describes the
topographical inclination of the soil either toward or away from the source
stream. Groundwater flow direction depends on the contours of the water
table surface and affects where return flow may occur at a given time.74 In
concrete terms, timing of return flow to a stream from an irrigated field is a
function of the field’s soil type and its topography with relation to the
stream.
From the perspective of hydrology, the presence of return flow depends
on a host of factors including consumptive use (transpiration) by crops and
other mechanisms that transport water out of the system or back to the
source. Imposed onto these factors is the additional variable of timing. The
injury analysis should therefore take into account all of these factors to
ensure that an accurate picture of return flow is drawn.
III. OBSTACLES TO INSTREAM FLOW PROTECTION
Obstacles to instream protection can be separated into three categories.
First, practical limitations stemming from a lack of resources and local
opposition to instream protection lead to deficiencies in the physical ability
to manage the system. Second, “creative” administration of the water laws
by OWRD often imposes an unfair double standard on instream transfers.
Finally, the formal transfer process provides a forum for official challenges
to instream transfers.
A. Practical Limitations
The first category of limitations on instream transfers are those
imposed by a lack of resources directed to state administration of water and
those imposed by political opposition to the idea of instream water rights.
These are inextricably related. Opposition to instream protection comes
from many who believe water should be put to “productive” uses such as
farming and ranching.75 Often, those charged with administering instream
rights share some of this opposition. Watermasters live and work in the
agricultural communities they regulate, making impartial treatment of
instream rights difficult at best and a conflict of interests at worst. In
addition, regulation of water rights is complaint driven. As holders of
instream rights, the state does not “complain” on behalf of instream rights
with the same vigor a private right holder would.76 This problem is
73 DINGMAN,
supra
note 59,
at 231.
74 LAMPSON INSTREAM PROPOSAL,
supra
note 68, at 8.
75
See
Debby Schoeningh,
Farmers Battle Oregon Water Trust over In-Stream Water Rights
Transfer
, CAPITAL PRESS, Sept. 27, 2002, at 29.
See generally
Water For Life, Inc.,
http://www.waterforlife.net (last visited Nov. 12, 2006) (Water for Life is a group dedicated to
promoting agricultural water rights).
76
See
Jack Sterne,
Instream Rights and Invisible Hands: Prospects for Private Instream
Water Rights in the Northwest
, 27 ENVTL. L. 203, 217, 232–33 (1997) (discussing the lack of

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compounded by a lack of accurate knowledge about how much water is
being diverted from a given river at any given time and by the sheer volume
of administration required to oversee the system.
Individual watermasters oversee large land areas with hundreds,
possibly thousands, of individual water rights. The John Day Basin for
example, is roughly the size of Massachusetts and has only one
watermaster.77 Monitoring each individual water right throughout the state
is therefore impossible, and the system relies to a large degree on self-
policing and complaints from right holders when their rights are infringed.
Compounding this difficulty, a tiny fraction of diversions among those 70,000
rights are metered. In other words, measurement of water use is not
mandatory. At the discretion of OWRD, water users may be required to
install measuring devices on their diversions.78 As of 2003, however, only 8%
of combined surface and ground water rights are required to do so.79
Governmental entities, including state and federal agencies, local
governments, irrigation districts and water conservation districts which
appropriate water are required to submit an annual water use report to the
OWRD.80 Compliance with this rule is not 100%.81 Installation of a more
comprehensive, statewide measurement program is an expensive
proposition and one for which no budget currently exists.82 The importance
of this lack of measurement must not be overlooked. A system designed to
regulate water use and continually balance use among competing interests
that has no means of measuring and monitoring such use is flawed. Without
measurement, water resource management is,
at best
, a guessing game.
The practical problem of doing a big job with insufficient people and
information is compounded by the complaint-driven nature of Oregon water
law. Water users commonly divert more than their certificated right,
especially during times of the year such as early summer when water is
plentiful. So long as all out-of-stream diversion rights are being met and
water diversions are not being measured, this practice goes unregulated by
watermasters.83 When water becomes scarce, however, water users are
legally entitled to ask their watermaster to regulate other users according to
the priority scheme.84 This complaint system works well for out-of-stream
diversions and other water uses for which owners are identifiable, as these
enforcement of public instream rights in the Northwest and suggesting privatization of instream
rights).
77 BASTASCH,
supra
note 23, at 115.
78 OR. REV. STAT. § 540.310(2) (2005).
79 BARRY NORRIS, STATUS REPORT ON WATER MEASUREMENT AND REPORTING 2 (2003),
available at
http://www1.wrd.state.or.us/files/Publications/staff_reports/2003%20April/WS%20
Item%20II%20-%20Measurement.pdf.
80 OR. REV. STAT. §§ 294.004, 537.099 (2005).
81
See
NORRIS,
supra
note 79, at 3 (stating that compliance is about 85%).
82
See id.
83
See
Reed D. Benson,
Maintaining the Status Quo: Protecting Established Water Uses in
the Pacific Northwest, Despite the Rule of Prior Appropriation
, 28 ENVTL. L. 881, 890 (1998)
(discussing the lackadaisical enforcement of water use).
84
See
OR. REV. STAT. § 540.100(1) (2005).

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owners will be motivated to immediately “call” for water when they are not
receiving their share.
Instream rights, however, are held by the State of Oregon in trust for
the people of Oregon.85 As trustee, the state is charged with complaining on
behalf of public instream rights.86 In other words, the state must complain to
itself when state watermasters are not enforcing instream rights. 87 This is an
unlikely prospect. On the other hand, a lessee of a water right for temporary
instream transfer has the same legal standing as the lessor regarding
management and enforcement of the instream right.88 Short-term instream
leases therefore have an enforcement advantage over public instream rights.
Lesees can complain on behalf of their rights, however, they may
nonetheless be hampered by a lack of accurate streamflow information.
B. “Creative” Administrative Challenges to Instream Transfers
On top of the practical obstacles to instream protection, OWRD’s
administrative interpretations of Oregon’s transfer laws make life difficult
for instream applicants. Three administrative policies in particular have the
potential to discourage future instream transfers.89 These include limiting
total instream rights on a river to “estimated average natural flow,” refusing
to create instream rights greater than state-created instream rights, and
challenging the creation of permanent instream rights at the end of a lease
period based on the “ready, willing, and able” language. These policies are
not mandated by Oregon’s water law; rather they represent the choice of
OWRD to scrutinize instream transfers and, more importantly, epitomize the
divergent handling of instream and out-of-stream rights.
1. ENAF Is Enough?: Estimated Average Natural Flow as a Ceiling for
Instream Rights
OWRD’s rules limit the amount of an instream right to the “estimated
average natural flow” (referred to by the misnomer “ENAF”) of the river.90
This number varies by month, and for most rivers in Oregon it decreases
throughout the summer. For example,91 the hypothetical “River Why” in
Eastern Oregon has an ENAF in June of 3 cubic feet per second (cfs), in July
of 2 cfs, and in August of 1 cfs. If a landowner on the River Why had a 2.5 cfs
irrigation right they wished to transfer instream, OWRD’s rules would limit
the instream right in July and August of a given year to 2 and 1 cfs,
85 OR. REV. STAT. § 537.341 (2005).
86
See
Sterne,
supra
note 76, at 217.
87
See id.
88 OR. ADMIN. R. 690-077-0077(17) (2006).
89 Interview with Fritz Paulus, Executive Dir., Or. Water Trust (Jan. 23, 2006) [hereinafter
Paulus Interview] (on file with author).
90 OR. ADMIN. R. 690-077-0015(4) (2006). OWRD often uses a 50% exceedence figure to set
ENAF. ENAF is basically what it says—
average
flow.
91 It should be noted that this is a highly simplified example, used only to demonstrate one
possible operation of the ENAF policy.

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respectively, regardless of how much water was
actually
available. In other
words, during a wet year, if 4 cfs flowed instream through August, the
instream right could nonetheless be limited by ENAF—potentially allowing
irrigators with junior rights to diminish flow instream below 2.5 cfs. OWRD
allows for an exception where “flows that exceed [ENAF] are significant for
the public uses applied for. An example of such an exception would be high
flow events that allow for fish passage or migration over obstacles.”92 Two
questions are raised by this hypothetical. First, how would a landowner have
a water right greater than ENAF in the first place? Second, ENAF doesn’t
seem to be much of a limitation. If the water is not normally available
anyway, how does it matter that the instream right is limited?
The answer to the first question is simple. When many senior water
rights were established, no one knew what the ENAFs for particular rivers
were.93 Therefore, many rivers in Oregon are overappropriated—the sum of
the water rights is greater than the average flow of the river at any particular
time. The second question, related to the first, can only be answered by
comparing the treatment of the instream right with how the right would be
treated if it remained an irrigation right. Out-of-stream uses are not limited
by ENAF.94 On the hypothetical River Why, therefore, in a wet year with 4
cfs flowing through August, a 2.5 cfs out-of-stream right would be satisfied
through August, assuming all senior rights were being met as well. In
contrast, OWRD could allow irrigators with rights
junior
to the instream
right, to withdraw water, reducing the instream right to ENAF—2 cfs in July
and 1 cfs in August. This result is not fair; after all, when creating instream
rights, the legislature clearly stated that instream rights should be on equal
legal footing with “any other right for which a certificate has been issued.”95
92 OR. ADMIN. R. 690-077-0015(4) (2006)
.
The Water Resources Commission (Commission)
met on August 10–11, 2006, and approved a change to this rule. The new rule creates a
presumption that ENAF may be exceeded:
(5)
Unless the Director determines otherwise
, for instream water rights established
through instream transfers, leases, or allocations of conserved water . . . if the criteria in
Subsection (5)(a) and (b) . . . are met: (a) The flow does not exceed the maximum
amount of any instream water right application applied for under OAR 690-077-0020 for
the same reach or portion thereof, and for the same public use. (b) For the specified time
period that flows are requested to exceed the estimated average natural flow or lake
level, the stream is in an ODFW flow restoration priority watershed.
Final Proposed Rules, OR. ADMIN. R. 690-077-0015(5) (proposed Aug. 11, 2006) (to be codified at
OR. ADMIN. R. 690-077-0015(5)) (emphasis added). At the request of Water for Life, an
agricultural water rights lobbying group, the Commission inserted the language allowing the
Director of Water Resources to “make a finding different from the presumption.” Memorandum
from Phillip C. Ward, Dir., Or. Water Res. Dep’t, to Water Res. Comm’n 5 (Aug. 11, 2006) (on file
with author). This language could significantly weaken the new exception if it leaves the
process open to lobbying efforts by influential groups opposed to instream transfers.
93 ENAFs for specific rivers were only established at the time ODFW began applying for
state instream water rights.
94 The only limitation on out-of-stream uses is the priority system.
See
supra
note 7 and
accompanying text.
95 OR. REV. STAT. § 537.350 (2005);
see also
id.
§ 537.334.

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OWRD’s rationale for limiting instream rights to ENAF is that adding
water instream above the average natural flow is not a beneficial instream
use.96 This may be a valid legal argument—it may seem like too much to ask
to protect
more
water instream than average natural flow. However, this
argument assumes no marginal benefits accrue above average flows. In
reality, above average flows could result in above average fish survival or
other related ecosystem benefits. Zero flexibility in the ENAF policy unfairly
precludes these potential benefits and further tilts the field toward
consumptive users. Out-of-stream users, even on over-appropriated rivers,
are only regulated off according to priority. Imposing the ENAF limitation is
an unnecessary burden on instream rights.
2. Another “Beneficial Use” Ceiling
In addition to the ENAF ceiling limiting new instream rights, OWRD
may also limit the conversion of existing rights to instream rights in relation
to the amount of
state-created
instream rights on the river. As noted earlier,
since 1987, the departments of Fish and Wildlife, Environmental Quality, and
State Parks and Recreation have been able to ask OWRD to create instream
water rights to promote specific “public uses.”97 Fish and Wildlife requests
instream rights on behalf of the public for “conservation, maintenance and
enhancement of aquatic and fish life, wildlife and fish and wildlife habitat.”98
The Department of Environmental Quality does so in the name of “pollution
abatement,”99 and Parks and Recreation in the name of “recreation and
scenic attraction.”100 In conjunction with these statutorily defined “public
uses” OWRD will only approve instream rights that “serve a public use or
uses”101 and will not allow the combined amount of instream rights for a
reach to “exceed the amount needed to provide increased public
benefits.”102 In other words, once an instream right is granted on a river or
through a reach for a purpose requested by Fish and Wildlife, Environmental
Quality, or Parks and Recreation, the right becomes the maximum OWRD
will protect instream on that river or reach.
In practice, the result of this policy is that instream transfer
applications by private landowners with senior rights are allowed only up to
the cap set by the state created instream rights. For example, if Fish and
Wildlife applied for and was granted a 5 cfs right on the hypothetical River
Why in 1988, the total amount of instream rights on the River would be
capped at 5 cfs. A 2 cfs instream right created by temporary lease, with a
senior date of 1909, would not augment Fish and Wildlife’s instream right,
but instead be subsumed within it. The total amount of instream rights on
96 Interview with Oregon Water Trust Staff, Oregon Water Trust (Jan. 23, 2006) [hereinafter
Staff Interview] (on file with author).
97 OR. REV. STAT. § 537.336(1)–(3) (2005).
98
Id.
§ 537.336(1).
99
Id.
§ 537.336(2).
100
Id.
§ 537.336(3).
101 OR. ADMIN. R. 690-077-0015(9) (2006).
102
Id.
at 690-077-0015(10).

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the River Why would remain 5 cfs but 2 cfs of the rights would have a senior
priority date of 1909 and 3 cfs would have a priority date of 1988. Another
applicant who then sought to transfer an additional 4 cfs instream on the
River Why would be limited to 3 cfs such that the combined instream rights
do not exceed the 5 cfs specified by Fish and Wildlife.
Application of the policy operates differently when the instream right
requested by a state agency exceeds the current amount of available
unappropriated water.103 In this case, OWRD uses the instream amount
requested as a “management objective.”104 As landowners apply for instream
rights on the river, those rights will accumulate toward the “objective”
amount of instream water until the goal is met. Once the objective amount is
reached, OWRD would cap instream rights on the river as outlined above.
Nothing in the Instream Water Rights Act requires a cap on the
combined amount of instream rights. OWRD may be misinterpreting
“beneficial use” in imposing this limitation. When creating instream rights,
the legislature defined two important terms. First, “instream flow” is “the
minimum
quantity of water necessary to support the public use requested by
an agency.”105 Second, the legislature made clear that “public uses are
beneficial uses.”106 OWRD reads these provisions together to mean that
instream rights, whether state-created or created by private-party purchase
or lease, are only beneficial to the extent they support the
minimum
amount
necessary for a public use. The legislature did not impose this limit, and a
plain reading of the law does not require it. Nowhere does the Act refer to
the combined amount of instream rights in a river or reach and limit that
amount to the instream flow requested by state agencies. In fact, the
language giving private parties the right to lease water rights for conversion
instream is devoid of reference to public uses, instead declaring simply that
“the use of the [leased] water right as an in-stream water right shall be
considered a beneficial use.”107 A plain reading of the statute, then, supports
two separate types of instream rights: State agency-created rights limited to
the minimum quantity necessary for public uses and rights created by
private-party lease or purchase which are beneficial uses separate of their
relation to public uses.
OWRD’s handling of state agency instream rights makes the assumption
that the agencies “hit the nail on the head” every time they request instream
rights. Yet fish biologists, for example, disagree about the interaction
between streamflow and fish habitat.108 As a result, an instream request for
fish habitat could prove inadequate in the future as streamflow needs are
better understood. The law also lacks any standards for the agencies to
103 Unappropriated water available means “water that exceeds the quantities required to
meet existing water rights of record, minimum streamflows and instream water rights and for
known and yet to be quantified Native American treaty rights.” OR. ADMIN. R. 690-077-0010(30)
(2006).
104
Id.
at 690-077-0015(2).
105 OR. REV. STAT. § 537.332(2) (2005) (emphasis added).
106
Id.
§ 537.334(1).
107
Id.
§ 537.348.
108 Neuman & Chapman,
supra
note 19, at 161.

GAL.PILZ.DOC 11/15/2006 9:28:24 PM
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1401
aspire to, except that, within their discretion, they “may request” instream
rights to support public uses.109 Because the agency-requested rights can
effectively become caps on allowable instream rights, an arbitrary request
could have far-reaching consequences—limiting in perpetuity the total
amount of possible streamflow protection.
The purpose of this discussion is not to say OWRD’s policy is illegal and
should be overturned. Rather, the point is to shed light on some of the
weaknesses of OWRD’s policy
choices
and demonstrate again the hesitancy
of the agency to fully embrace the idea of instream flows for their own sake.
Oregon law, through OWRD’s policies, allows out-of-stream diversions to
completely dewater numerous rivers throughout the state. Common sense
dictates that the opposite should also hold. Oregon law and OWRD’s policies
should allow for a river where all out-of-stream diversions are converted to
instream rights resulting in zero diversions and year-round water flow.
3. NOT “Ready, Willing, and Able?”: A Creative Application of the Forfeiture
Law
Oregon’s limited forfeiture statute exempts from forfeiture any amount
of water use less than the certificated amount if the appropriator is
nonetheless “ready, willing, and able” to put the full certificated amount to
use.110 In other words, if, at the time of a transfer, an appropriator no longer
has an irrigation system capable of handling the full amount of their water
right, they forfeit the amount of water they are no longer “able” to use.
OWRD may use this language to limit landowners’ ability to permanently
transfer rights instream at the conclusion of a five-year lease period.111 The
limitation would go something like this: the watermaster would challenge
the instream transfer alleging that, because the landowner’s irrigation
system sat unused for ten years, the landowner is no longer “ready, willing,
and able” to put their entire right to use. Alternatively, the watermaster
could challenge the transfer on the grounds that the water right had been
forfeited before the instream lease period began. They would then determine
how much the dilapidated irrigation system could handle and limit the
instream transfer to that reduced amount.
This limitation is a
creative
application of the law, at best. At worst, it
represents an expression of hostility toward conversion of existing uses to
instream uses. Instream uses are equal in the eyes of the law to other
beneficial uses.112 Use of the entire right instream during the lease period
109 OR. REV. STAT. § 537.336(1)–(3) (2005).
110
Id.
§ 540.610(3)(a)–(b). This feature of Oregon law standing alone is problematic enough
to merit an entire article.
See
Koehl,
supra
note 47, at 1143.
111 Staff Interview,
supra
note 96.
112 OR. REV. STAT. §§ 537.332–537.360 (2005). Instream rights are subordinated in some
strictly limited contexts not germane to this discussion.
See
id.
§ 537.352 (granting limited
precedence over some types of instream rights for municipal storage projects, municipal uses
applied for by municipal applicants, and hydroelectric projects);
id.
§ 537.534 (declaring
instream rights subject to emergency water shortage regulations);
id.
§ 537.360 (giving
precedence to pending hydroelectric applications over applications for instream rights

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does not begin the forfeiture clock—the right is in “use,” and only non-use
leads to forfeiture. The “ready, willing, and able” language is only germane to
water rights requiring physical diversions and should not be applied to
instream rights, which are fundamentally different. Specifically, when the
Oregon legislature created instream rights one of the founding tenets of
Western water law had to be unearthed and rearranged. The requirement
that a landowner physically divert water from the stream to have a valid
water right could not coexist with instream rights—rights which by their
nature are not diverted out of the stream.113
The dichotomy between the physical diversion required for
consumptive uses and the lack of such a requirement for instream uses
highlights why the “ready, willing, and able” language of the limited
forfeiture law should not apply in instream transfer scenarios. Water is
always ready, willing, and able to flow down its natural course and the
legislature has declared that water flowing in its natural course is essentially
being put to “use.” In contrast, putting water to consumptive use requires
controlling works such as dams or pumps to transport water out of the river.
The limited forfeiture law was, in part, an attempt by the legislature to
encourage conservation by allowing irrigators the flexibility to reduce water
use—for example by switching to lower water use crops—without the threat
of losing some of their water right.114 The flexibility came with some costs
however. Foremost was the requirement that, to retain their entire water
right, irrigators had to maintain a system capable of putting the whole right
to use should they want to switch to a more consumptive use in the future.
In contrast, if an irrigator decides to transfer their right instream
permanently after a lease period during which they used their
whole right
instream, the “ready, willing, and able” language should not apply. Doing so
takes the limited forfeiture law entirely out of context and is a misreading of
Oregon law.
C. Formal Opposition to Instream Transfers
Oregon law provides a forum for water users to oppose proposed
transfers and present evidence of potential injury from the proposed
changes.115 Formal proceedings, called “contested case hearings,” are held
in accordance with Oregon’s Administrative Procedures Act (APA).116 The
formal procedure is not the only method by which instream transfers are
opposed, however. Opposition voiced by local watermasters prior to
initiation of formal transfer proceedings can stop an instream transfer as
well. Both forms of opposition demonstrate the vigor with which OWRD
submitted during the pendancy of the hydroelectric permit application).
113
See id.
§ 337.332(3) (including in the definition of “in-stream right,” the requirement that
such a right “does not require a diversion or any other means of physical control over the
water.”).
114 Koehl,
supra
note 47, at 1148.
115 OR. ADMIN. R. 690-380-4030 (2006).
116 OR. REV. STAT. §§ 183.310–183.550 (2005).

GAL.PILZ.DOC 11/15/2006 9:28:24 PM
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AT THE CONFLUENCE
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undertakes injury analysis in the face of potential instream transfers. On the
other hand, understanding how OWRD analyzes injury in instream transfers
will allow future applicants to come to the process better prepared and with
applications better tailored to comply with the no injury rule.
1. Big Trouble on Little Creek: The Water Trust’s Contested Case Hearing
In 1998, the Oregon Water Trust applied to transfer 0.341 cfs of irrigation
rights dating from 1863 and 1925 to instream use on behalf of a landowner in
Union County, Oregon.117 Both rights authorized diversions from Little Creek,
a tributary of Catherine Creek, which in turn flows into the Grande Ronde
River. The 1863 right was for irrigation use and was used intermittently
throughout the year.118 The Oregon Water Trust proposed protecting the
water instream as a reach for 2.5 miles from the old POD on Little Creek to the
confluence with Catherine Creek and changing the intermittent use of the 1863
right to continuous flow from June through September at a lower flow rate.119
A group of landowners and a local ditch improvement district (the
“protestants”) filed a protest of the proposed transfer. All of the protestants’
rights are junior to the applicant’s 1863 right, and with the exception of the
improvement district, all of the protestants’ water rights are upstream of the
proposed instream reach.120 In addition, none of the protestants rely on return
flow from the applicant’s lands for their water rights.121 The protestants’
opposition to the transfer was based on the fear of being regulated off during
the irrigation season to protect the more senior instream right downstream of
their diversions.122 In response to the protest, OWRD initiated a contested
case hearing to decide the matter.123
Contested case hearings, held under Oregon’s APA,124 are quasi-judicial
proceedings during which evidence is presented, including witness testimony
117 State of Or., Certificate of Water Right, Number C-6236 (July 1, 1863),
available at
http://stamp.wrd.state.or.us/apps/misc/vault/vault.php [hereinafter Water Right Certificate 6236]
(enter 6236 in the “Certificate” field and click on “Search”); State of Oregon, Certificate of Water
Right, Number C-12036 (July 21, 1938),
available at
http://stamp.wrd.state.or.us/apps/misc/
vault/vault.php (enter 12036 in the “Certificate” field and click on “Search”).
118 Water Right Certificate 6236,
supra
note 117.
119
Proposed Order at 5,
In re
Protest Against Transfer Application T-8058 (Hr’g Officer Panel
for Or. Water Res. Dept., Nov. 22, 2002) [hereinafter Proposed Order] (on file with the Or. Water
Trust).
120
Id.
121
Id.
at 6.
122
See id.
at 6–9 (detailing individual protestants’ beliefs about the effect of the proposed
order based on their past use and experiences).
123 In February of 2006, the Oregon Water Trust settled the dispute with the protestants.
OWRD mediated the settlement and should be commended for their participation. Under the
settlement terms, a majority of the existing right was transferred to an instream right and a
generic final order was issued that
did not
incorporate the findings of the hearing officer in the
Proposed Order. While the Proposed Order therefore has no value as precedent in future
transfer proceedings, it is quoted extensively in this comment to illuminate the formal transfer
process and OWRD’s formal transfer policies. E-mail from Fritz Paulus, Executive Dir., Or.
Water Trust, to author (Apr. 6, 2006) (on file with author) [hereinafter Paulus E-mail].
124 OR. REV. STAT. §§ 183.310–183.550 (2005).

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and cross-examination.125 According to the APA the burden of proof in a
contested hearing “rests upon the proponent of the fact or position.”126 The
applicant for a transfer therefore has the burden of proving that no injury will
occur if the transfer is approved. However, because the purpose of a
contested case hearing is to develop a full record upon which a decision on
injury can be made, the burden of proof is “not so explicitly assigned.”127 The
primary concern in the water right context is that the hearing develop a record
upon which OWRD can make an affirmative finding by a preponderance of the
evidence that “the proposed change can be effected without injury . . . .”128
The protestants presented two main arguments against the transfer:
1) the proposed transfer would result in more water being left instream than
was historically used on the applicant’s land, and 2) the instream right would
change the historical pattern of use and result in reduced seasonal availability
of water to downstream irrigators.129 The question before the hearing officer
was whether the changes protestants feared constituted
legal
injury. As noted
above,130 differentiating
legal
injury from allowable changes is the crux of the
injury analysis. The Oregon Water Trust and OWRD contended the changes
did not constitute
legal
injury because they were no different than the impacts
protestants would suffer had the applicant exercised his water right to its full
“paper” extent.131 The hearing officer agreed with this interpretation and
issued a “Proposed Final Order” stating “the transfer can be affected without
legal injury to existing water rights.”132
A number of key “guideposts” for injury analysis in formal transfer
scenarios can be gleaned from the Proposed Order and the testimony during
the hearing of Thomas J. Paul, the Administrator of the Field Services Division
at OWRD:133
125
See
Proposed Order,
supra
note 119, at 1–2.
126 OR. REV. STAT. § 183.450(2) (2005).
127 Proposed Order,
supra
note 119, at 10;
see
OR. REV. STAT. § 183.482(7) (2005) (mandating
that judicial review of orders in contested hearings is limited to the record developed in the
hearing); Or. Envtl. Council v. Or. State Bd. of Educ.,
761 P.2d 1322, 1326 (Or. 1998) (stating that
in contested case proceedings “the agency must base its decision on a record of evidence that
the contesting parties have an opportunity to develop, it must confine its decision to the
evidence so developed, and it must explain how its decision complies with the law and is
supported by the facts”);
cf.
Norden v. State
ex rel.
Water Res. Dep’t,
996 P.2d 958, 960 (Or.
2000) (ruling on the standard for judicial review of orders other than those issues through
contested case hearings).
128 Proposed Order,
supra
note 119, at 10;
see also
OR. ADMIN. R. 690-380-4030 (2006).
Each person submitting a protest shall raise all reasonably ascertainable issues and
submit all reasonably available arguments supporting the person’s position . . . . Failure
to raise a reasonably ascertainable issue in a protest or failure to provide sufficient
specificity to afford the Department an opportunity to respond to the issue precludes
consideration of the issue during the hearing.
Id
.
129 Proposed Order,
supra
note 119, at 11.
130
See supra
Part II.D.3.
131 Proposed Order,
supra
note 119, at 12.
132
Id.
133 It should be noted that after negotiations between the protestants, OWRD, and the Water

GAL.PILZ.DOC 11/15/2006 9:28:24 PM
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AT THE CONFLUENCE
1405
a. Regulation of Junior Rights Is Not Legal Injury
The protestants’ major concern was that after creation of the instream
right, they would be regulated off from use of their rights to a greater extent
than in the past. Again, all of the users but the irrigation district were not
only junior, but also upstream of the proposed instream right. Because of
their junior priority dates, however, the protestants could have been
regulated off at any time regardless of whether the applicant’s right was an
instream right or an irrigation right. Prior appropriation is based on a system
that regulates in favor of senior rights at the expense of junior rights.134
Inherent in this system is the inevitable shut-off of junior diversions to allow
water to pass to seniors. While this type of regulation may cause hardship, it
does not represent legal injury. In the context of instream rights the Oregon
legislature conferred upon them equal legal status with other types of
appropriations. As such, if an instream right is senior, regulation in favor of
the right to the detriment of juniors is not legal injury.135
b. Water Right Transfers in Oregon Begin with the Presumption that the
Entire “Paper” Right Is Transferable
The protestants also argued that the proposed regulation of the new
instream right would result in protecting more water than was historically
used by the applicant. Again, under Oregon law, this is not
legal
injury.
Oregon’s transfer statute is explicit that water subject to transfer includes
the water represented by a “water right certificate.”136 This language creates
the initial presumption that transfers begin with the amount printed on the
certificate. Oregon’s law contains no reference to historical use that would
limit transferable water to what was historically used by the appropriator.
Further supporting this proposition, Oregon’s limited forfeiture law exempts
from forfeiture any amount of water less than the certificated amount if the
appropriator is nonetheless “ready, willing, and able” to put the full
certificated amount to use.137 In other words, using less than your “paper”
right does not work a forfeiture if you are otherwise capable of diverting the
entire amount.138 OWRD interprets these statutes as mandating that, “in
evaluating transfers, the Department begins with the full face value of the
water right . . . and then examines the proposal to determine whether it
Trust, the parties agreed to a settlement over the transfer. The following discussion does not
represent legal conclusions from the resolution of the transfer but rather represents the analysis
of the author based on the applicable law and analysis and testimony in the Proposed Order.
134 Low v. Rizor, 37 P. 82, 84 (Or. 1894); Cole v. Logan, 33 P. 568, 569 (Or. 1893).
135 OR. REV. STAT. § 537.350 (2005).
136
Id.
§ 540.505(4)(b).
137
Id.
§ 540.610(3)(b).
138 Proposed Order,
supra
note 119, at 13.

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would cause injury.”139 Therefore, unless OWRD determines injury will
occur, it must approve a transfer of the full “paper” water right.
c. A Water Right Holder Is Not Entitled to the Undiverted Portion of
Another Right Holder’s Water
Based on Oregon’s limited forfeiture law, downstream users—such as
the improvement district in the Little Creek dispute who are accustomed to
receiving an undiverted portion of an upstream user’s water right—are not
legally
entitled to continuance of that amount of water. Oregon law allows a
change from a historic use that consumed a fraction of a water right to a use
that consumes the entire water right and leaves no excess water flowing to
downstream users as long as no legal forfeiture has occurred.140 This
includes transfer from a consumptive use to instream protection. The
undiverted portion of an upstream users’ right should not be confused with
established return flow from an upstream user to which downstream users
are legally
entitled.141 In the Little Creek dispute, none of the parties could
identify return flow from the applicant’s land and the dispute was over
undiverted water.142 Return flow is limited to water returning to the source
stream
after
use and is not the same as undiverted water.143 Once again,
what instream proponents seek is equal treatment with consumptive uses.
The limited forfeiture law does not discriminate between consumptive and
instream uses and the formal protest process should reflect this.
d. Changing the Historic “Shape” of a Water Right Is Not Injury If the
Change Is Within the Extent Allowable Under the Right
An important part of the Oregon Water Trust’s application for the Little
Creek instream right involved changing the use from intermittent use to
continuous flow so that the water would be protected, i.e. in “use” for a
continuous but shorter time period. Changes in the parameters of a water
139
Written rebuttal testimony of Thomas J. Paul Admin., Field Service Div. at 5,
In re
Protest
Against Transfer Application T-8058 (Hr’g Officer Panel for Or. Water Res. Dept., June 4, 2002)
[hereinafter, Rebuttal testimony of Thomas J. Paul] (on file with Or. Water Trust).
140 Written Reubttal Testimony of Thomas J. Paul at 5,
In re
Protest Against Transfer
Application T-8058 (Hr’g Officer Panel for Or. Water Res. Dept., June 4, 2002);
see also
, OR. REV.
STAT. § 540.610(3) (2005) (exempting historical use below certificated amount from forfeiture).
Whether wise or not, this is Oregon’s law and other states have chosen different paths;
cf
. COLO.
REV. STAT. §37-92-302(2)(a) (2005) (requiring a transfer applicant to provide information on
historical consumptive use).
141
See
Jones v. Warmsprings Irrigation Dist., 91 P.2d 542, 546 (Or. 1939);
see also
Stuart L.
Somach,
Who Owns Reclaimed Wastewater?
, 25 PAC. L.J. 1087, 1095 (1994) (stating that an
appropriator has a right to the natural flow but once it is diverted and returned it is considered
“unappropriated water” and cannot be appropriated by upstream users).
142 Proposed Order,
supra
note 119, at 6.
143
Jones
, 91 P.2d. 542 at 546;
see
Dale B. Thompson,
Of Rainbows and Rivers: Lessons for
Telecommunications Spectrum Policy from Transitions in Property Rights and Commons in
Water Law
,
54 BUFF. L. REV. 157, 178 (2006).

GAL.PILZ.DOC 11/15/2006 9:28:24 PM
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AT THE CONFLUENCE
1407
right such as timing of use are often referred to as “shaping.” Such shaping
of a water right is not injurious if the new “shape” “could . . . have been
affected by the exercise of the water right . . . to the fullest extent allowed by
law.”144 Water rights certificates specify the rate at which an appropriator
may divert water, the full extent of the monthly or seasonal duty (expressed
as the total amount of water that may be applied to each acre of appurtenant
land each month or for the season if one is specified), and the season of use
of the water right.145 Enlargement, a species of legal injury, occurs if the
reshaped water right exceeds any of these parameters.146 However,
changing the historic timing of use as the Oregon Water Trust proposed for
the Little Creek right, is not injury because the applicant would have been
within his “paper” right to make the change regardless of the transfer.147 In
other words, the applicant was not proposing to use more water or use the
same amount of water for a longer period of time. Instead, the new “shape”
of the water use would be a lower but continuous flow for a concentrated
period of time rather than intermittent use throughout the year.
e. Continued “Subirrigation” from Adjacent Lands After an Instream
Transfer Does Not Constitute Enlargement
In the Little Creek dispute, the protestants claimed that the applicant’s
land could not be prevented from receiving water from Little Creek even
after transferring the entire right instream because his land would continue
to be subirrigated from neighboring lands and because a wetland fed by
Little Creek could not be dried up and would continue to seep water onto
the applicant’s land.148 Under Oregon’s administrative rules, a water right
will be considered enlarged if under a change in place of use, the original
place of use cannot be prevented from receiving water from the same
source.149 This rule prevents users from transferring a water right to a new
place of use in such a way that the old place of use continues to benefit from
subirrigation by water applied on the new place of use.150 OWRD interprets
144 Rebuttal testimony of Thomas J. Paul,
supra
note 139, at 5 (stating that it is injurious if
the new shape “could not have been affected by the exercise of the water right”).
145 Some certificates do not specify total or monthly maximum duties in which case
appropriators are not regulated by that figure. However, if a water right does not specify season
of use, the season is limited by rule to March 1 through October 31. OR. ADMIN. R. 690-250-070(1)
(2006).
146
Id.
at 690-380-0100(2)(a)–(d) (2006).
147
See
Proposed Order,
supra
note 119, at 12–13 (stating that a change in the historic use of
a water right, including season, is not the determining factor of whether the transfer will be
injurious to existing water rights).
148
Id.
at 18.
149
See
OR. ADMIN. R. 690-380-0100(2)(c) (2006) (stating that failure to keep the original place
of use from receiving water from the same source is considered enlargement).
150 An example may be helpful: A landowner has two adjacent fields, one uphill of the other,
the lower of which has a water right for irrigation. The uphill field does not have a water right.
The landowner would be prevented by this rule from changing the place of use of her water
right from the lower field to the upper field if the lower field would continue to receive

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this rule to mean that if the original place of use continues to benefit from
the transferred water right, enlargement occurs.151 But under OWRD’s
interpretation of its own rules, the “same source” language refers to “water
diverted from the water right being transferred,”—the specific water that
was previously being diverted and irrigating the transferor’s land—and
excludes subirrigation from water rights used on adjacent land or from
springs or wetlands not included in the water right being transferred.152
Therefore, because the applicant’s land in the Little Creek dispute would
receive only limited subirrigation from adjacent lands and springs—natural
phenomena that could not reasonably be prevented—the hearing panel
found no enlargement would occur.
f. Efficiency of a Water User’s Conveyance System Is Not an Injury
Consideration
Finally, the protestants argued that once the applicant stopped
diverting his irrigation water, those users who shared the applicant’s
irrigation ditch would not receive their entitled water because the
applicant’s diversion was necessary to help “carry” their water down the
ditch.153 On Little Creek, as in many other places, water users often share
one POD and one conveyance system such as a ditch, canal, or pipe, with
each landowner taking his water from the system as it passes his land.
Because of inefficiencies in conveyance systems such as leaky pipes, surface
evaporation from open ditches, or seepage losses out of unlined ditches,
together referred to as “carriage losses,” transporting a given amount of
water from the source to the place of use can be difficult. Often, diversion of
more than the sum of the water rights the system serves is required to
provide sufficient “head” to transport the water to the respective places of
use.154 Maintenance of a diversion and conveyance system capable of
diverting a user’s full water right is the responsibility of the user.155 More
importantly, water rights certificates specify the rate of diversion at a
specific point on the source stream.156 Because water right certificates
specify the rate at the point of diversion and not at the place of use,
watermasters are charged with ensuring the specified amount of water is
available at the POD, but are not charged with ensuring that amount of
subirrigation from the water now being applied to the upper field.
151 Rebuttal testimony of Thomas J. Paul,
supra
note 139, at 3–4. An agency’s interpretation
of its own rules is entitled to deference so long as the interpretation is “plausible.” County of
Morrow v. Dep’t of Fish & Wildlife, 37 P.3d 180, 184 (Or. App. 2001) (quoting Don’t Waste Or.
Comm. v. Energy Facility Siting Council, 881 P.2d 119, 125 (Or. 1994)).
152 Rebuttal testimony of Thomas J. Paul,
supra
note 139, at 3–4.
153 Proposed Order,
supra
note 119, at 19.
154
See id.
at 18–19.
155 OR. ADMIN. R. 690-250-0030 (2006).
156 OR. REV. STAT. § 537.250 (2005) (outlining the requirements for a certificate and some of
the information required therein);
id.
§ 539.140 (listing information included in the certificate).

GAL.PILZ.DOC 11/15/2006 9:28:24 PM
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AT THE CONFLUENCE
1409
water makes it to the place of use.157 In other words, no injury occurs
because an inefficient conveyance system—like the ditch in the Little Creek
dispute—is made more inefficient when one user ceases diverting their
share through the ditch.
The foregoing discussion is an attempt to shed light on many of the
issues encountered in formal contests of instream transfers. The discussion
is by no means exhaustive. As evident in the next section, new challenges lie
around every corner. However, keeping these “guideposts” in mind at the
outset can help an instream transfer applicant anticipate and mold their
application around potential difficulties. The next section further illuminates
the vigor with which OWRD applies formal injury analysis to instream
transfers.
2. Imposing the “No Injury Rule” Come Hell or High Water: Watermaster
Opposition
The Walla Walla River originates in the Umatilla National Forest in far
northeast Oregon and flows twenty-eight miles before crossing the border
into Washington where it spills into the Columbia River. A landowner with
100 acres adjacent to the Walla Walla River approached the Oregon Water
Trust desiring to transfer water instream from nineteen of the acres. Under a
water right certificate issued in 1895, the applicant irrigates land as pasture
for livestock.158 The water is delivered to the land through a one-and-a-half-
mile-long, unlined, earthen ditch. The rate of diversion of Walla Walla River
water associated with the nineteen acres is 0.7125 cfs measured at the POD
of the ditch.
With the Trust’s help, the landowner submitted an application to OWRD
to effectuate the instream transfer. In consultation with the local
watermaster, OWRD sought to reduce the amount available for transfer
instream to account for loss of return flow. No formal protests were filed,
and the proposed reduction occurred in the context of OWRD’s initial review
of the transfer. The watermaster based his calculations on the Cuenca
tables’ model of crop water requirements.159 He calculated the consumptive
use of nineteen acres of the applicant’s pasture based only on the crop use
from transpiration and set that as the amount available for transfer, calling
the entire difference return flow. This calculation assumes all water not
directly used by the applicant’s crops is return flow available to downstream
irrigators. During July, when the pasture crop is using the most water,
OWRD has indicated they would limit the instream right to roughly twenty-
five percent of the total certificated amount or 0.179 cfs. After July, the
157 OR. ADMIN. R. 690-250-0030 (2006).
158 State of Oregon, Certificate of Water Right, No. 12750 (Apr. 5, 1940),
available at
http://apps.wrd.state.or.us/apps/misc/vault/vault.php?submit=Search&cert_nbr=12750;
see also
LAMPSON INSTREAM PROPOSAL,
supra
note 68, at 9.
159
Compare
CUENCA,
supra
note 66, at 115 (outlining relevant calculation factors),
with
LAMPSON INSTREAM PROPOSAL,
supra
note 68, at 10 (applying factors to the data from irrigated
land).

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instream right would decrease further as crop transpiration decreases with
the cooler fall weather.
The applicant and the Trust hoped to put more than 0.179 cfs back into
the river during the driest months of the summer. The Trust therefore hired
consultants to evaluate return flow from the pasture back to the Walla Walla
River. Based on the consultant’s calculations, some return flow from the
pasture does find its way back to the river, but the time it takes for the water
to do so ranges from twenty to fifty days depending on where the water is
applied. For their calculations the consultants assumed an irrigation season
beginning in March and ending October 1. October 1 is a common ending
point for irrigation seasons in Oregon. Under this assumption, water applied
to acres furthest from the river during the later months of the summer does
not return to the river before October 1, after which, the Trust assumed, it
would no longer be useful to downstream irrigators. As a practical result, the
Trust felt this water should not be subtracted as return flow and should
therefore be available for transfer instream.
Specifically, the Trust’s consultants calculated that water applied 400
feet from the river takes twenty days to return to the river through
underground channels, water applied 700 feet distant takes thirty-five days,
and water applied 1000 feet away takes fifty days to reach the river.160 The
amount of the total diversion applied 1000 feet from the Walla Walla River is
0.3652 cfs. The consultants then calculated the latest dates of water
application at the various locations that would allow return flow from these
lands to reach the Walla Walla before October 1. For land 400 feet from the
river, water applied after September 11 will not reach the river before
October 1. Water applied 1000 feet distant after August 12 will not return to
the river before October 1.161 Using these dates combined with the amount
of water applied at each distance interval, the consultants calculated that,
from August 12 to October 1, 0.39 cfs is effectively “consumed” because it
does not return
to the river before the assumed end of irrigation season.162
The Trust felt this number represented an amount of water that could be
protected instream beginning on August 12 and avoid injury to downstream
users. Before August 12, the consultants recommended using OWRD’s
consumptive use numbers163 from the Cuenca tables to set the amount of
instream protection. The Trust and the applicant did not object to these
lower numbers during the early summer months because flows are higher in
the Walla Walla during these times and instream protection is not as vital.
The Trust and the applicant were confident they had found a solution
balancing protection for downstream users with intelligent, site-specific
160 LAMPSON INSTREAM PROPOSAL,
supra
note 68, at 10.
161
Id.
162
Id
. To arrive at this final number, the rate of water application per distance interval was
multiplied by the number of days between Dnr and the end of irrigation season and divided by
183 days in the irrigation season. These numbers were then added together with August and
September’s total crop ET and the amount by which return flow from the ditch would be
reduced based on the distance of the ditch from the river.
163
Id.
at 11. These values were: April: 0.034 cfs; May: 0.072 cfs; June: 0.100 cfs; July: 0.179 cfs;
and August 1–11: 0.144 cfs.
Id.

GAL.PILZ.DOC 11/15/2006 9:28:24 PM
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AT THE CONFLUENCE
1411
water management for instream benefit. OWRD did not agree—even after
reviewing the Trust’s hydrologic report.164 Instead, OWRD raised a new
challenge to the transfer from a different angle.
OWRD’s new argument centered on the lack of a limited irrigation
season on the Walla Walla River. The outer limits of irrigation seasons in
Oregon are set by court decree.165 The irrigation season for the Walla Walla
River is unrestricted.166 According to the decree:
Unlike most irrigated sections, the water users in the Walla Walla Valley apply
the water to their lands throughout the year. Such use tends to saturate the
ground and build up the water table so as to retard and reservoir [sic] the
water, making it available for use later in the season. This practice appears to
be beneficial and necessary for the production of good crops . . . .167
The Trust’s proposed solution incorporated a limited irrigation season under
the assumption that downstream irrigators would cease diverting some or all
of their right after October 1 when wet weather returns. Based on the
decree’s unrestricted irrigation season, however, OWRD claims the water,
whenever it returns
to the Walla Walla—even if it returns after October 1—
should be available for downstream users. In other words, OWRD does not
agree with the Trust’s assumption that return flow is not useful to
downstream irrigators if it returns after October 1.
In light of this disagreement, the question should be, “did downstream
irrigators in the past,
in fact
, rely on return flows from the applicant’s lands
after October 1?” If the answer is affirmative, OWRD is reasonable in
continuing to limit the instream right after August 12. If, however,
downstream irrigators have never depended on the contribution of return
flow from the applicant’s land after October 1, continued OWRD opposition
would be another example of the double standard on instream transfers.
Finding a definitive answer requires a factual determination of historical
irrigation practices in the area. However, the Trust’s assumption that
irrigation ends on October 1 is likely supportable—by October, temperatures
are moderating, rains are returning, and downstream irrigators are less likely
to rely on the small contribution in return flow from the applicant’s land.168
No definitive answer is necessary, however, for the discussion to provide
important guidance. Four more “guideposts” for instream transfers arise
from the scenario.
164 Paulus Interview,
supra
note 89.
165 Renken v. Young, 711 P.2d 954, 960 (Or. 1985) (stating irrigation season may be set by
judicial decree). Individual rights may have their own limitations separate from the decree, but
will never exceed the irrigation season set by the decree.
166
In the Matter of the Determination of the Relative Rights to the Use of Waters of the
Walla Walla River and Its Tributaries, A Tributary of the Columbia River, State Eng’r of Or.,
Umatilla County 75, 77 (Dec. 12, 1930) (Findings and Order).
167
Id
. at 76–77.
168 In the Cuenca tables, this phenomenon is expressed as a reduced Crop ET—in other
words a reduced crop need for water. CUENCA,
supra
note 66, at 2.

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a. The Standard for Proving Return Flow Requires More Than Mere
Speculation
As the Walla Walla scenario demonstrates, the presence of return flow
depends on a number of site-specific hydrologic and topographic variables
and cannot be theoretically assumed or taken for granted.169 Site-specific
analysis is necessary to determine the existence, amount, and timing of
return flow. Basin-wide observations are insufficient and the person
opposing the transfer on the basis of return flow must offer more than “mere
speculation” about the flows’ existence.170 Therefore, in the face of
opposition from OWRD, the applicant seeking an instream transfer should
ask OWRD to provide more than speculative evidence—more than the local
watermaster’s “gut” feeling—that there is return flow.
b. Timing of Return Flow Must be Taken into Account
When water is removed from a source either permanently or for long
enough that it returns to the source only after irrigation ceases for the year,
that amount of water should be counted as consumptive use and should
not
be subtracted from a proposed instream transfer as presumed return flow
available to other users. Watermasters are often more conservative than this,
using the Cuenca tables to determine crop ET of specific crops in a transfer
proceeding and using this number alone to determine how much water is
available for transfer. The flaw in this approach is that it assumes all water
not consumed by plants returns to the source, and does so in time for
downstream users to divert and use the water during irrigation season. Crop
ET should be a starting place in determining injury based on the presence of
return flow, but relying on this number alone oversimplifies the analysis. To
the extent that return flow will not return to the source before the end of
irrigation season, the entire water right should be protectable instream.
c. Instream Applicants Should Pay Close Attention to Irrigation Season
Limitations
Analyzing the timing of return flows requires that the applicant know
whether an official irrigation season is set by decree or included in the water
right itself, or alternatively, what the prevailing local practices dictate. In the
Walla Walla transfer, the Trust ran headlong into the problems caused by a
year round irrigation season. If the Walla Walla decree, like many other
decrees in Oregon, ended the irrigation season on October 1, the Trust’s model
would have met less resistance from OWRD. Knowing the irrigation season is
also important for applicants seeking to transfer a right instream and change
169 DINGMAN,
supra
note 59, at 220.
170 Proposed Order,
supra
note 119, at 16–17.

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the “shape” of the right because the shape will be restricted by the irrigation
season if it is limited.
d. Return Flow Entering the River at a Point Above a Downstream
Junior’s POD Should be Subtracted to the Extent of Potential Injury
With all that has been said about when return flow should
not
be
subtracted from an instream transfer, it would be irresponsible to ignore
situations where return flow should be subtracted to protect other river
users. Proven return flow—flows demonstrated by affirmative evidence—
should be subtracted from the amount of water available for transfer to
avoid injury to downstream appropriators.171 This is appropriate for
transfers to either instream or different consumptive uses or places of use.
OWRD’s policy “works backward from the full face value of a water right,
presuming all other transfer application criteria are met, limiting the
proposed transfer to the extent that injury is found.”172 For instream
transfers in particular this means reducing the amount that will be protected
instream by the amount of proven return flow legally and actually relied
upon by other water users. However, this process need not be static;
dynamic compromises are possible when parties are willing to work
together. For instance, instream rights may be separated into distinct
reaches defined by where return flow enters the river.173 If the exact
location of the return flow is known, the full amount of the water right may
be protected instream from the old POD down to this point, and the
instream right can diminish thereafter.174 On the other hand, if the exact
point of return for return flow is unknown, it may be appropriate to reduce
the instream right at the old POD to account for uncertainty.175 However this
is done, instream transfer and consumptive use transfers should be treated
the same.
IV. ACHIEVING STREAMFLOW PROTECTION BY MODELING SUCCESS
The final section of this Comment will explore the future of streamflow
protection in Oregon. Perhaps the greatest step Oregon could take toward
171 Rebuttal testimony of Thomas J. Paul,
supra
note 139, at 5.
172
Id
.
173 OR. ADMIN. R. 690-077-0075(2)(c)(B) (2006) (“Where an instream water right passes
through an area of known natural losses these losses shall be prorated between the instream
water right and the balance of the available flow.”).
Where return flows occur at a definite point, a substantial distance below the point of
diversion, an instream water right may be defined by more than one reach, for example
one reach from the point of diversion to the location of the return flow and another from
this point to the mouth of the stream.
Id.
at 690-077-0075(2)(b)(B).
174
Id.
at 690-077-0075(2)(c)(A).
175
Id
.

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more effective management of water rights—both in and out-of-stream—is
implementation and strict enforcement of a comprehensive metering and
reporting requirement.176 The impact of such a law would likely be
immediate—rivers dewatered by wasteful, unregulated consumptive uses
would have the chance to flow again and junior instream and out-of-stream
rights that have gone unsatisfied for decades might be fulfilled. With a
clearer picture of actual water use and availability, resource management
decisions could be more responsive and accurate. That said, large-scale
changes like comprehensive metering take time and streamflow protection
cannot wait. Creative solutions within the existing legal and regulatory
context are necessary.
The evolution of the water trust concept, employing cooperative,
market-based, approaches to arrive at these solutions, is a primary
innovation.177 Two examples in the following discussion illustrate the
creativity necessary to increase streamflow protections under the current
regime. In the John Day Basin in central-eastern Oregon, the Oregon Water
Trust recently finalized a deal on the Austin Ranch to shorten the irrigation
season for the use of several water rights, thereby leaving water instream
during key parts of summer. This transaction exemplifies creative
application of the transfer laws respecting existing rights while increasing
streamflow protection. Farther north and east from the John Day Basin in
the Lostine River Valley, the Oregon Water Trust brokered another unique
deal with a large number of landowners who agreed to limit their late-
summer diversions to maintain a specified amount of water in the Lostine
River. This deal demonstrates the potential for purely private agreements to
achieve instream protection outside the boundaries of the law.
The next sections discuss three successful examples of the above-
mentioned strategies. First, Washington State’s measurement program is
analyzed. Next, the two Water Trust deals are examined in detail.
A. A Measurement Model: Washington’s Measurement Requirement
In 1993, Washington enacted a requirement of “metering of diversions
or measurement by other approved methods” as a requirement for all new
surface water rights and for some existing rights as well.178 The law requires
measurement of new surface water permits, new and existing surface water
rights in waters containing depressed or critical salmonid stocks, new and
existing groundwater rights where withdrawal could affect depressed or
critical salmonid stocks, and existing surface water rights where the
diversion exceeds 1 cfs.179 In contrast, Oregon has no comprehensive
surface measurement requirement. Through permit conditions and other
176 Russell,
supra
note 24, at 188.
177 For a detailed discussion of the genesis of the water trust movement and the Oregon
Water Trust in particular, see Neuman & Chapman,
supra
note 19, at 139 and Neuman,
supra
note 19, at 442.
178 WASH. REV. CODE § 90.03.360(1) (2006).
179 WASH. ADMIN. CODE 173-173-040 (2005).

GAL.PILZ.DOC 11/15/2006 9:28:24 PM
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sporadic regulations, Oregon measures only 8% of combined surface and
groundwater rights accounting for only 46% of the water subject to
diversion.180 Much of this measurement is of municipal water use and
groundwater wells. OWRD has also inventoried “significant”181 diversions,
but has yet to impose measurement requirements.
The ineffectiveness of Oregon’s measurement program stems from the
types of water uses measured. Small, salmon-supporting creeks in rural
parts of the state, which is a majority of the streams that groups like the
Oregon Water Trust work on, have few municipal water withdrawals.
Instead, these streams are dewatered by small irrigation diversions, often
diverting more than their certificated right. Without a comprehensive
metering requirement, irrigators are left to divert as much water as their
ditch can handle.182 Unless another user calls for regulation, this unlawful
practice often goes unnoticed.183 Non-enforcement against unlawful
diversion is the most significant symptom of Oregon’s measurement failure
and instream rights will bear the brunt of the impact. Relying on self-policing
by irrigators lacking accurate information and with little incentive to
minimize diversion and use results in instream rights throughout the state
not being met despite water availability.
By 2002, Washington had issued administrative orders for 903 water
rights representing 80% of total estimated water diversions in its fish critical
basins.184 Perhaps more importantly, Washington provided more than
$3,000,000 in financial assistance to help defray the costs of installing
metering equipment.185 Both the number of administrative orders, and the
financial commitment demonstrate that Washington has a significant head
start over Oregon in instituting meaningful water measurement. Oregon’s
current scattered measurement requirements lack focus,
comprehensiveness, and financial backing. Oregon would benefit from a
more targeted measurement approach modeled on Washington’s laws.
Specifically, OWRD should focus on small, fish producing streams where
incremental increases in instream water would have large impacts.
B. Austin Ranch: Changing Use Without Risk of Injury
While many instream transfers are limited by injury considerations to
small amounts of water, the Oregon Water Trust recently completed a deal
on the Middle Fork of the John Day River and two important tributaries to
protect as much as 10 cfs instream during the driest months of the summer.
180
See
NORRIS,
supra
note 79, at 2.
181
See id.
at 1.
182
See
Janet C. Neuman,
Beneficial Use, Waste, and Forfeiture: The Inefficient Search for
Efficiency in Western Water Use
, 28 ENVTL. L. 919, 955–56 (1998) (discussing the catch-22 faced
by users who want measurement of “that other guy[’s]” water use but hesitate at the thought of
their own use being measured).
183
See
Russell,
supra
note 24, at 173 (describing the rarity of enforcement of wasteful use).
184 WASH. STATE DEP’T OF ECOLOGY, REPORT TO THE LEGISLATURE: ACTIONS AND PROGRESS ON
WATER USE–EFFICIENCY 14 (2003),
available at
http://www.ecy.wa.gov/pubs/0311014.pdf.
185
Id.
at 15.

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Beginning July 20 of every year, Austin Ranch, with a senior water right, will
stop diverting water from the Middle Fork and from two mountain
tributaries.186 Shortening their irrigation season may require Austin Ranch to
reduce the number of livestock they raise by approximately 20%.187 The
Trust has compensated them monetarily for this change. The agreement is a
simple and
permanent
change in the season of use of the water rights.188 To
effectuate the change, Oregon Water Trust and the landowner submitted an
affidavit to OWRD to “abandon” use of the water right during the late
summer months.189 OWRD will not need to regulate other water users to
enforce the 10 cfs instream, so injury considerations did not affect the
change.
The added flow late in the summer will ensure that downstream
irrigation withdrawals do not dewater the river as long as the downstream
irrigators stay within their legal limits. The Oregon Water Trust and the
owners of the Austin Ranch are confident the deal will result in “real”
streamflow. No new appropriations are allowed in the John Day Basin190 so
the water that was previously diverted by the ranch is not subject to new
appropriation downstream. Even if the water were subject to appropriation,
the adjacent downstream water right holders are conservation entities such
as the Nature Conservancy and the Warm Springs Tribe who are not
interested in out-of-stream uses.191 The next out-of-stream user is twenty
miles downstream.192 Most importantly, the project has qualitative benefits
on top of any increase in water quantity. Increased flows in the two
mountain tributaries will improve fish habitat by adding much-needed cold
water to entice migrating salmon.193 These qualitative benefits may be felt
up to seventy miles downstream.194
186 OR. WATER TRUST, AUSTIN RANCH PROJECT PROFILE 1 (Feb. 2, 2006) [hereinafter AUSTIN
RANCH PROFILE] (on file with author).
187
Id.
188
Id.
189
See
OR. REV. STAT. § 540.621 (2005) (confirming that when an owner certifies under oath
that he has abandoned the water right and desires cancellation thereof, the commission “shall
enter an order canceling the water right”). OWRD allowed the landowner to “abandon” use of
the water beginning on July 20. AUSTIN RANCH PROFILE,
supra
note 186,
at 1. The parties called
this surrendering of late season water a “partial season diminishment” rather than an outright
abandonment. Paulus E-mail,
supra
note 123.
190 OWRD has statutory authority to withdraw waters from availability for appropriation. OR.
REV. STAT. § 536.410(1) (2005). OWRD calculates water availability using an 80% exceedance
rule. OR. ADMIN. R. 690-400-010 (11)(a)(A) (2006). When “the quantity of surface water available
during a specified period is not sufficient to meet the expected demands from all water rights at
least 80 percent of the time,” the river is considered “over-appropriated” and is closed to future
appropriations.
Id
.
191 Paulus E-mail,
supra
note 123.
192
Id.
193 AUSTIN RANCH PROFILE,
supra
note 186,
at 2.
194
Id.

GAL.PILZ.DOC 11/15/2006 9:28:24 PM
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C. Private, Market Solutions on the Lostine River
The Oregon Water Trust’s work on the Lostine River in northeastern
Oregon is unique, involving a private agreement not requiring OWRD
approval and an unheard of number of participant-landowners. Seeking to
avoid federal regulatory intervention on behalf of listed anadromous fish
species, irrigators along the Lostine River met with the Oregon Water Trust
to discuss options for increasing summer streamflows.195 The result of these
meetings was a deal involving five ditch companies and more than one
hundred landowners.
Rather than pursuing short-term, instream leases, each involving a
potentially complicated transfer analysis, the parties agreed to enter a
contract requiring no OWRD approval. With the help of local fish biologists
and Indian tribes, the parties set a goal of keeping 15 cfs instream during the
late summer.196 Accomplishing the desired streamflow involved careful
monitoring and day-to-day adjustment of the amount of water diverted out-
of-stream. OWRD participated by installing a stream-flow gauge above the
irrigators’ diversions and paying an independent hydrologist to monitor
flows twice daily. The hydrologist relayed his flow readings to the heads of
the five ditch companies encompassing all of the irrigators. Based on these
readings, the irrigators controlled their withdrawals—always trying to leave
15 cfs instream. In return, the Oregon Water Trust compensated the
irrigators for each day during the contract period that the goal was met.
The Lostine deal is remarkable in two ways. First, using private
contracts outside OWRD’s leasing program was previously unheard of. The
high participation by irrigators demonstrates the power of using
individualized market incentives to drive water apportionment decisions.
Protecting habitat has market value to landowners who might otherwise
face sanctions. At the same time, the cooperative solution respected the
landowners’ way of life—leaving the ultimate decision of whether to meet
the daily goal in the hands of the irrigators. Second, the Lostine deal
highlights the potential of comprehensive metering and reporting to promote
effective water distribution. Real-time knowledge of streamflow conditions
was essential for the landowners to meet the daily goal. The task is similar
throughout the state. The constant flux of water availability necessitates
accurate measurement and, in turn, accurate measurement ensures impartial
and effective distribution.
Several drawbacks take away from the Lostine project’s success. The
deal was limited to one summer. Absent another agreement, the Lostine
River is not protected for the future.197 The arrangement was also expensive.
195 Joe Rojas-Burke,
Salmon, Ranchers Win in Deal
, THE OREGONIAN, Oct. 23, 2005, at B1.
196
Id
.
197 At the time this Comment was published, the parties were in talks to renew the
agreement on similar terms for the 2006 summer irrigation season. The irrigators, with help
from the Nez Perce Tribe, are also pursuing a long-term funding solution from Bonneville Power
Administration for ditch lining, improving headgates, and rebuilding diversion structures. E-mail
from Ryland Moore, Project Manager, Or. Water Trust, to author (Mar. 31, 2006) (on file with
author).

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The Oregon Water Trust paid more than $100,000 for one summer of
instream flow protection.198 This level of financing is not sustainable on a
long-term basis. Finally, many irrigators were unsatisfied with how the water
was apportioned.199 Some felt cheated when flows in the Lostine exceeded
15 cfs feeling that water was being left instream that should have been used
for irrigation. Of the five ditch companies participating in the deal, only one
was equipped with a modern diversion capable of accurate metering. If all
the ditch companies had similar equipment, the resulting accuracy of
distribution would obviate the need to overshoot the daily goal and would
result in more water availability for irrigators.
Despite these drawbacks, the Lostine River deal, as well as the Austin
Ranch deal, are models for achieving streamflow protection by working
“outside the box.” Any solution that balances instream uses with respect for
existing consumptive uses involves trade-offs on both sides. Both of the
Trust’s deals show that the two sides, irrigators and streamflow protection
advocates, are willing to make these sacrifices in the name of mutual
benefit.
V. RECOMMENDATIONS FOR THE FUTURE
Recommendations based on the forgoing discussion are two-tiered. On
the first-tier are recommendations to change the way instream rights are
administered. These changes require institutional and political changes—
changes that take time and steady pressure from advocates. The second-tier
of recommendations are modeled after successes within the existing regime.
The successes on the John Day and Lostine Rivers exemplify the future of
streamflow protection in Oregon and the West. Both solutions avoid injury
to existing uses without necessitating OWRD scrutiny or implicating
OWRD’s administrative policy hurdles.
A. First-Tier Recommendations
1. Enact a Comprehensive Measurement Requirement
Washington’s model and the success of measurement on the Lostine
River underline the need for accurate measurement in Oregon. Improving
the availability and accuracy of information about water withdrawals would
have an immediate effect on the distribution of water. Unlawful diversions
and waste would decrease and instream and consumptive water uses both
would experience higher rates of satisfaction. The common criticism of this
proposition is that it will be too costly—either water right holders will be
forced to bear the burden or the state will have to take money away from
other important initiatives. However, spending money on measurement
makes sense as a public expenditure because it avoids unseen costs
198
Id.
199
Id.

GAL.PILZ.DOC 11/15/2006 9:28:24 PM
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associated with unlawful water use and provides valuable benefits. Before
implementing its measurement requirement, Washington examined several
areas within the state where intense regulation, including measurement, was
already being implemented and found that fishery benefits alone could
amount to upwards of $18.1 million in a single basin.200 Other benefits may
be less quantifiable but no less important, such as increased water
availability during future droughts.
2. Treat Instream Transfers Equally with Consumptive Uses in Transfer
Proceedings
This Comment outlines numerous examples of disparate treatment of
instream transfers despite the mandate that instream rights are legally equal.
Several specific changes would make huge strides towards leveling the
playing field: 1) Molding injury analysis to better reflect site-specific
hydrology and patterns of use by codifying the standards and burdens of
proof OWRD must meet to prove injury or enlargement; 2) doing away with
caps on total instream rights such as the ENAF policy which discourage
instream protection and are not applied to other consumptive uses and;
3) limiting application of the limited forfeiture law’s “ready, willing, and
able” language to consumptive uses rather than instream uses. The
important thing to recognize about each of the policies these changes
address is that they represent OWRD’s choices. The law does not compel the
strict application of the ENAF policy, nor does it compel application of the
“ready, willing, and able” language to instream rights. Our water use
priorities are slowly shifting away from total consumptive use and OWRD
should embrace this shift and lead the way in encouraging it rather than
shying away.
B. Second-Tier Recommendations
1. Strive for Creative Solutions Within the Existing Legal and Regulatory
Regime
Asking for large-scale policy change is a long-term solution. In the short-
term, success requires familiarity with the spectrum of potential challenges to
instream deals and the foresight to maneuver through them. Where possible,
projects should be designed that do not implicate the “no injury” rule. Projects
that effectively put water instream without creating official “instream rights,”
like the Oregon Water Trust’s change in season of use on the Austin Ranch,
avoid many complications. Before applying for an instream right, practitioners
should ask if any changes can be made to the existing use to achieve the
desired streamflow without implicating injury analysis. Possibilities include
changing the season of use, split-season leasing, and outright cancellation of
200 WASH. DEP’T OF ECOLOGY, EVALUATION OF PROBABLE BENEFITS AND COSTS 3 (Nov. 19, 1991),
available at
http://www.ecy.wa.gov/programs/WR/measuring/images/pdf/cost%20benefit.pdf.

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rights in basins where new appropriations are barred.
2. Look for Private Solutions
The Oregon Water Trust’s Lostine River deal highlights a new avenue
for streamflow enhancement. For emergency situations or other short-term
water requirements, private contracts provide a powerful and flexible tool.
The range of potential agreements is vast. Examples include compensating
irrigators for self-policing and maintaining instream goals, compensation for
installing metering equipment and reporting use, or rotational irrigation
agreements where each of several irrigators agrees to forgo water on a
seasonal schedule. The key to finding these solutions is working with
irrigators themselves to pinpoint where their interests and the interests of
those advocating streamflow enhancement intersect.
VI. CONCLUSION
Advocates for streamflow protection must recognize the sea of change
instream rights are bringing upon Western water law. The disconnect
between using a system honed to distribute water
out
of rivers, to leave
water
in
rivers for ecological benefit, is obvious from the preceding
discussion of the confluence of theory and practice. Each new instream
transfer calls upon the parties and OWRD to stretch the limits of existing
laws to accommodate new values while trying to protect old ones. In light of
this, OWRD should be highly commended for working with instream transfer
applicants and groups like the Oregon Water Trust. Oregon’s status as the
first state to create instream water rights gives it a valuable head start in the
movement to shift away from total consumptive use to a more sustainable
balance. As a result, the amount of water left instream in Oregon is
increasing each year. However, without continued innovation in the
regulation and administration of water both instream and out, the risk of
reaching a plateau is real. Hopefully, the lessons learned at the confluence of
theory and practice are a starting place for these changes.