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Exempt Use Wells: Windfalls and Pitfalls of a Well-Worn Permitting Shortcut (Part Two of Two)
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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 Caylin J. Barter

This article appeared in the September 23, 2019 edition of the DJC Oregon.

If you read last month’s column, you already know that exempt use wells can be a great option to get water where it’s needed without first applying for a permit, especially when other water supplies aren’t readily available. In Part One of this two-part series, we explored the context and history of exempt use wells and discussed situations where they are authorized and where they are restricted. Part Two offers a short introduction for new readers, then drills down on current problems that may drive statutory changes in the future.
 
  1. Statutory context

Exempt use wells bypass the water right permitting system that otherwise governs all new water use in the state. Under Oregon law, “all water within the state from all sources of water supply belongs to the public,” ORS 537.110, and “all waters within the state may be appropriated for beneficial use,” ORS 537.120. In order to establish a legal right to access this public supply for a “beneficial use” (think municipal, irrigation, domestic, industrial, mining, etc.), all new water uses must comply with the Water Code, enacted in 1909, which requires users to apply for and fulfill the conditions of a permit in order to receive a legally authorized water right from the Oregon Water Resources Department (OWRD). New permits are not allowed unless OWRD determines that water is available; in many parts of the state where water supplies are over appropriated (meaning cumulative authorized water use exceeds available supply), no new water rights can be issued without retiring existing rights or obtaining mitigation credits. However, exempt uses of groundwater are allowed without a permit—all you have to do is hire a well driller, pay a one-time $300 registration fee, mark the location of your well on a map for OWRD’s records, and start pumping.

Exempt groundwater uses are defined by statute at ORS 537.545 and include stockwatering; irrigating a lawn or noncommercial garden of half an acre or less; domestic use not exceeding 15,000 gallons per day; or industrial or commercial purposes not exceeding 5,000 gallons per day. The original policy purpose for allowing exempt uses without requiring a permit was to provide water for basic uses in areas where developed water infrastructure did not exist. In such cases, exempt use wells would be considered de minimis—meaning trivial or insignificant—and therefore it would be unreasonable to subject them to the multi-step permitting process that could otherwise prevent their existence.
 
  1. Problems

Under the Water Code, the operation of an exempt use well may not interfere with senior groundwater or surface water rights. However, OWRD will regulate the exempt use well only if the interference is “substantial” under OAR 690-008-0001, and only if any impacted senior groundwater right has a reasonably efficient well that also fully penetrates the groundwater aquifer. In practice, this can lead to well users in the vicinity investing in deeper wells and larger pumps in order to chase the groundwater to the bottom of the aquifer, exacerbating the risk of groundwater decline.

On occasion, individual exempt use wells can cause significant problems in areas where groundwater resources are already stressed. For example, as was widely reported in 2018, a dairy farm near Boardman used an exempt use well to provide stockwater for a feedlot that is home to as many as 30,000 dairy cows—an aggregate use of up to one million gallons per day. Making matters worse, the dairy sits in the Ordnance Critical Groundwater Area, which has been closed to all new appropriations of groundwater since 1976. Because the stockwatering exemption does not specify a daily maximum pumping limit, this use, though hardly de minimis, still purportedly falls within the exempt use statute.

More commonly, it is the combined pumping of many exempt use wells that leads to trouble. OWRD estimates that there were fewer than 5,000 wells in existence when the Groundwater Act was passed in 1955. Fast-forward six decades: in 2017, the Oregon Water Resources Commission reported that there were an estimated 230,000 exempt use wells in existence with several thousand more drilled each year, and the Oregon Health Authority puts the current number closer to 330,000. This is in addition to the approximately 25,000 nonexempt wells that operate pursuant to state-issued water rights. Even though most exempt use wells aren’t pumping their authorized daily maximum volume, their collective use is likely contributing to groundwater declines that have been observed in areas throughout the state. Many deep groundwater aquifers were filled during geologic events thousands of years ago and can’t easily be recharged, and even shallow aquifers may be at heightened risk of overdraft in the future due to greater unpredictability in annual precipitation.
 
  1. The future

Exempt use wells offer water users a bypass around the burdensome—and often prohibitive—permitting process that otherwise applies to all new water uses in Oregon. However, our water supply is finite, and every new exempt use well drives overall demand ever higher. Continued enjoyment of the flexibility offered by exempt use wells will likely depend on reductions in nonexempt water uses (such as improvements in irrigation efficiency and reductions in municipal demand), or, possibly, on changes to the exempt use statute itself. Various interest groups have floated ideas for statutory changes, including, for example, placing volume limits on the stockwatering exemption, or restricting locations where the domestic exemption can be used. As Oregon’s water supply portfolio continues to be stretched and scrutinized, some changes to the Water Code are likely—some of which could affect the options you have to satisfy your own water supply needs. Prudent would-be water users will consult legal counsel prior to drilling an exempt use well to ensure their plans can become a reality.

Caylin J. Barter is a water and natural resources lawyer at Jordan Ramis PC. Contact her at (503)598-7070 or caylin.barter@jordanramis.com.

The information contained in this article is for general interest and should not be regarded as legal advice. If you have questions, or to obtain more information on this topic, please contact an attorney in our Environmental and Natural Resources Practice Group.