Jordan Ramis pc. Attorneys at law
Community Water Supply Permit Extension Developments
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This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

By Steve Shropshire

On March 1, 2002, the Oregon Water Resources Department (WRD) announced its intention to modify the administrative rules governing extensions for municipal water use permits.1 This modification is a minor change to the rules to clarify that municipal water use permit holders have the option of applying for an extension of their permits, but are not required to do so until July 1, 2003.2

This rule modification once again brings the municipal water use permit extension issue into the public eye. This article is intended to provide a brief historical review of the issue and to provide a status report on the Community Water Supply Work Group's progress and its efforts to craft new rules addressing municipalities' future water supply needs in an environmentally conscious manner.

The Problem. Community water suppliers need long-range water supplies to support future municipal water demand as their communities grow. However, Oregon's water code generally requires water permit holders to diligently develop their permitted use within a limited time period (usually no more than five years). For water uses not fully developed within this time, the permit holder must either seek an extension of the permit or face cancellation of the permit.
This approach does not accommodate the long-term needs of municipal water suppliers, who typically hold water use permits allowing them to divert or pump large volumes of water at high rates of flow. Current demand typically totals only a portion of a supplier's total permitted right. Additionally, some community suppliers hold permits for future development that have not been acted upon at all. Thus, it is impossible and impractical to expect these permit holders to diligently develop their water use within the traditional short-term diligence period.

When municipal permits are granted, it is generally understood that the suppliers will put increasing amounts of water to use over time, as water supply demands grow with population increases. Consequently, for many years, the municipal suppliers have asserted that on-going system improvements and capacity expansion constitute diligent development of their permitted uses. These suppliers have also maintained that municipal permits are not subject to cancellation, but rather may be extended for long periods, provided the long-term development effort is ongoing.

This understanding was called into question in 1997, when WRD proposed minor amendments to the extension rules. These proposed rules generated significant public comments, and ultimately prompted a more comprehensive review of the extension rules, including those pertaining to municipal water providers. Since that time, most of Oregon's streams have been identified as habitat for endangered or threatened fish. This further complicates the issue because of significant concerns regarding the availability of water to sustain those species.

Creation of the Community Water Supply Work Group. Based on concerns relating to the unique needs of municipal providers, WRD created the Community Water Supply Work Group in 1998. The work group was formed for the purpose of addressing the increasingly contentious issue of extensions for municipal water use permits. The work group consists of representatives from municipalities, trade groups, environmental organizations, and state agencies. Initial meetings focused on determining the work group members and defining the core issues for discussion. Substantive discussions began in earnest following the 1999 legislative session. To provide the work group with time to develop rulemaking proposals, the Water Resources Commission specifically exempted municipal use permit holders from the obligation to seek an extension until 2001. The proposed rule amendments will extend this to July 2003.

Attorney General Memorandum on Municipal Permit Cancellation. In November 1999, WRD's attorney issued a draft memorandum supporting a legal conclusion that "any permit held by a municipality is subject to cancellation under ORS 537.260, unless at least 25% of the water use allowed under the permit has been perfected within the time allowed." This conclusion was not accepted by the large number of municipal water use permit holders, who relied on a significantly different analysis of the legislative history behind the municipal permit exception.3 To clarify the three primary viewpoints on this issue, the work group decided that the municipalities, environmental groups, and WRD would prepare white papers setting out their perspectives and concerns.

Subcommittee Formed to Generate Substantive Proposals. In June 2000 the work group created a subcommittee to develop recommendations on a course of action for consideration by the full work group. This subcommittee has continued to meet since that time, working on substantive proposals for amending the Department's administrative rules.

Conceptual Proposal for Municipal Permit Extensions. In December 2001, the subcommittee released its conceptual proposal for municipal use permits issued before 1998.4 This proposal contemplates an amendment of both the permit extension rules in OAR Chapter 690, Division 315 and the water conservation and management plan rules in OAR Chapter 690, Division 86.

The basic concept would tie long-term permit extensions to the adoption of a current water management and conservation plan under Division 86. Under this proposal, municipal use permits would be extended for a reasonable time necessary to complete water development or to apply all the water to beneficial use. Upon receiving the permit extension, the permit holder would have the ability to develop water in 20-year blocks as quantified in its initial Division 86 plan and subsequent amendments. For water development extending beyond 2052, the level of scrutiny would likely increase beyond a simple needs-based analysis.

This approach would require WRD to analyze proposed Division 86 plans to determine if they meet certain criteria set forth in the rules. These criteria will likely be based on the reasonableness of growth projections and consideration of environmental impacts of increased water use from particular sources. The subcommittee is still working to generate a set of acceptable criteria and review standards.

Next Steps. At this time, the work group is attempting to finalize its proposals for the Division 86 and Division 315 rule amendments. Currently the work group anticipates having proposed rules ready for public comment before the end of May 2002. Under this schedule, the Water Resources Commission would likely consider adoption of the revised rules at its August 8th meeting.

1A permit is the inchoate right to begin using water for a beneficial purpose. By contrast, certificated water rights are those that have vested through application to beneficial use, sometimes referred to as "perfection."

2Comments to the proposed rule were due at 5:00 p.m. on March 25, 2002. The Water Resources Commission is likely to consider adoption of the rule amendment at its April 12, 2002 meeting.

3Correspondence regarding this issue is available athttp://www.orcities.org/members/environ/environ.cfm#drinking.

4Post-1998 and new permits will be addressed at a future time.
This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.