WaterWatch of Oregon v. Water Resources Department, 061020 ORCA, A165160

Docket Nº:A165160
Opinion Judge:POWERS, J.
Party Name:WATERWATCH OF OREGON, Petitioner-Appellant, v. WATER RESOURCES DEPARTMENT, Respondent-Respondent, and WARM SPRINGS HYDRO LLC, Intervenor-Respondent.
Attorney:Thomas M. Christ argued the cause for appellant. Also on the briefs were Cosgrave Vergeer Kester LLP and Brian J. Posewitz. Denise G. Fjordbeck argued the cause for respondent Oregon Water Resources Department. Also on the brief were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Soli...
Judge Panel:Before Ortega, Presiding Judge, and Egan, Chief Judge, and Powers, Judge.
Case Date:June 10, 2020
Court:Court of Appeals of Oregon

304 Or.App. 617 (2020)

WATERWATCH OF OREGON, Petitioner-Appellant,

v.

WATER RESOURCES DEPARTMENT, Respondent-Respondent,

and

WARM SPRINGS HYDRO LLC, Intervenor-Respondent.

A165160

Court of Appeals of Oregon

June 10, 2020

Argued and submitted August 30, 2018.

Marion County Circuit Court 16CV11938; Audrey J. Broyles, Judge.

Thomas M. Christ argued the cause for appellant. Also on the briefs were Cosgrave Vergeer Kester LLP and Brian J. Posewitz.

Denise G. Fjordbeck argued the cause for respondent Oregon Water Resources Department. Also on the brief were Ellen F. Rosenblum, Attorney General, and Benjamin Gutman, Solicitor General.

Crystal S. Chase argued the cause for respondent Warm Springs Hydro LLC. Also on the brief were David E. Filippi and Stoel Rives LLP.

Before Ortega, Presiding Judge, and Egan, Chief Judge, and Powers, Judge. [*]

[304 Or.App. 618] Case Summary: WaterWatch of Oregon (WaterWatch) appeals from a judgment of the circuit court that denied its petition for judicial review of actions by Oregon's Water Resources Department (WRD) concerning water rights on Rock Creek, a tributary of the Powder River. For nearly a century, a water right certificate issued by the state allowed the holder of that certificate to use water from the creek to generate power, and a dam on the creek diverted water to a power plant for that purpose. In 1995, the power plant shut down and the power company stopped diverting the water, eventually resulting in this dispute over what should happen to the water right once it was no longer being used for hydroelectric purposes. According to WaterWatch, ORS 543A.305(3) requires WRD to convert the hydroelectric water right to an in-stream right permanently held in trust for the public. That statute provides that water rights associated with a hydroelectric project shall be converted to a permanent in-stream water right for the public trust "[f]ive years after the use of water under a hydroelectric water right ceases." WRD and the holder of the water right certificate, Warm Springs Hydro LLC (Warm Springs), contend that conversion under ORS 543A.305(3) was never triggered because the water right had been used for in-stream use under a lease arrangement that, although itself not a hydroelectric use, nonetheless is a "use of water under a hydroelectric water right" during the relevant five-year period. The circuit court, agreeing with the position taken by WRD and Warm Springs, ruled in their favor and against WaterWatch on cross-motions for summary judgment. On appeal, WaterWatch argues that the circuit court erroneously construed ORS 543A.305(3). Held: The legislature intended the phrase "use of water under a hydroelectric water right" in ORS 543A.305(3) to include a beneficial in-stream use of water pursuant to the lease of a hydroelectric water right that occurs during the relevant five-year period, even though that use is not itself for the purpose of generating power.

[304 Or.App. 619] POWERS, J.

WaterWatch of Oregon (WaterWatch) appeals from a judgment of the circuit court that denied its petition for judicial review of actions by Oregon's Water Resources Department (WRD) concerning water rights on Rock Creek, a tributary of the Powder River. For nearly a century, a water right certificate issued by the state allowed the holder of that certificate to use water from the creek to generate power, and a dam on the creek diverted water to a power plant for that purpose. In 1995, the power plant shut down and the power company stopped diverting the water. This dispute later arose over what should happen to the water right once it was no longer being used for hydroelectric purposes.

The dispute involves the interplay between two statutes, ORS 543A.305 and ORS 537.348. The former was enacted in 1999, four years after the power plant shut down. It provides that water rights associated with a hydroelectric project shall be converted to a permanent in-stream water right for the public trust "[f]ive years after the use of water under a hydroelectric water right ceases." ORS 543A.305(3). In early 2000, just short of five years after the power plant shut down, the power company entered into a lease with the State of Oregon to temporarily convert its hydroelectric water right to an in-stream right under ORS 537.348, which predates ORS 543A.305 and authorizes the lease of "all or a portion of an existing water right * * * for conversion to an in-stream water right." The question presented by this case is whether that in-stream lease under ORS 537.348 is a "use of water under a hydroelectric water right" as that phrase is used in ORS 543A.305(3).

WaterWatch contends that, because the use of water for hydroelectric purposes ceased when the plant shut down, the text of ORS 543A.305(3) requires WRD to convert the hydroelectric water right to an in-stream right permanently held in trust for the public, regardless of any other in-stream use that was made thereafter. WRD and the holder of the water right certificate, Warm Springs Hydro LLC (Warm Springs), argue that conversion under ORS 543A.305(3) was never triggered because in-stream use under the lease [304 Or.App. 620] arrangement, although itself not a hydroelectric use, nonetheless is a "use of water under a hydroelectric water right" during the relevant five-year period.

The circuit court, agreeing with the position taken by WRD and Warm Springs, ruled in their favor and against WaterWatch on cross-motions for summary judgment. For the reasons that follow, we likewise conclude that the legislature intended the phrase "use of water under a hydroelectric water right" in ORS 543A.305(3) to include a beneficial in-stream use of water pursuant to the lease of a hydroelectric water right that occurs during the relevant five-year period, even though that use is not itself for the purpose of generating power. We therefore affirm the judgment of the circuit court.

I. BACKGROUND

A. Oregon's Water Laws Concerning In-Stream Use

To better frame the historical events giving rise to this appeal, we begin with a brief summary of the legal context in which those events occurred.

1.

Beneficial Use, Forfeiture, and Transfer

Historically, two different doctrines governed Oregon's laws regarding the use of surface water (i.e., water from streams and lakes): the riparian doctrine, in which use was based on a party's ownership of land adjacent to the water source, and the prior appropriation doctrine, which derived from a party's beneficial use of the water appropriated from the source, regardless of ownership of the riparian land. See generally Fort Vannoy Irrigation v. Water Resources Comm., 345 Or. 56, 64-67, 188 P.3d 277 (2008) (describing the history of the doctrine of prior appropriation in Oregon).

In 1909, Oregon enacted the Water Rights Act, which marked "the ascendancy of the appropriation doctrine as the prevailing water law of Oregon." Id. at 64. The act provides that "[a]ll water within the state from all sources of water supply belongs to the public," ORS 537.110, and that, subject to existing rights and certain exceptions, "all waters within the state may be appropriated for beneficial [304 Or.App. 621] use, as provided in the Water Rights Act and not other-wise[.]" ORS 537.120; see ORS 540.610(1) ("Beneficial use shall be the basis, the measure and the limit of all rights to the use of water in this state."); Fort Vannoy Irrigation, 345 Or at 87 (observing that, under the Water Rights Act, beneficial use remains "the foundation of an appropriative right").

For water rights that existed before 1909, the Water Rights Act provides that a "riparian proprietor" has "a vested right to the extent of the actual application to beneficial use; provided, such use has not been abandoned for a continuous period of two years." ORS 539.010. The act also provides a process for formally adjudicating existing rights, which includes circuit court review and, upon final determination of those rights, the issuance of a water right certificate-that is, "a certificate setting forth the name and post-office address of the owner of the right; the priority of the date, extent and purpose of the right, and if the water is for irrigation purposes, a description of the legal subdivisions of land to which the water is appurtenant." ORS 539.140.

For water rights created after 1909, "[appropriation alone was no longer enough to establish a vested right in the waters of the state; the water code required, and still requires, the fulfillment of other conditions before a water right will vest in the appropriator." Green v. Wheeler, 254 Or. 424, 430, 458 P.2d 938 (1969), cert den, 397 U.S. 990 (1970). Under the Water Rights Act, an appropriation needs to be "perfected," at which time the state issues a water right certificate of the same character as that described in ORS 539.140. See ORS 537.250.

Once a water right certificate issues, the rights described in it continue "so...

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