THE FUTURE OF OREGON’S WATER SUPPLY AND MANAGEMENT
Oregon’s Domestic Groundwater Exemptions: Present and Future Considerations

By: Laura Schroeder & Sarah Liljefelt

I. Domestic Groundwater Exemptions

In Oregon, a person wishing to appropriate (use) waters of the state must apply for a permit to do so. However, certain uses of groundwater are exempt from permitting requirements; most notably, certain domestic uses.

Domestic groundwater use exemptions are common within the western states, and have become a traditional feature of western water law. However, as demand for water grows, and domestic exempt groundwater uses become more prevalent, these exempt uses have the ability to threaten existing permitted uses of water, and the ability of states to curtail exempt uses.

This paper examines state laws which exempt domestic groundwater uses from permitting requirements, the methods states use to administer exempt and non-exempt uses simultaneously, and the recent actions taken by certain states to limit the effects of exempt groundwater uses.

II. Exempt Groundwater Basics in Oregon

In Oregon, all water belongs to the public, but individuals can apply to the Oregon Water Resources Department (“the Department”) for a permit to use water. Oregon Revised Statute (“ORS”) §§ 537.110, 537.120. Once an applicant has obtained a permit, he must “prove up” his water right; he must construct any necessary infrastructure and apply the water under the permit to a beneficial use on the authorized and appurtenant land, as laid out by the terms of the permit. ORS § 537.140. Once the work is complete, the permittee must hire a water right examiner to inspect the application of water in order to be granted a water right certificate, which is evidence of a property right to use the water. ORS §§ 537.230, 537.250.

Despite this basic statutory framework for water rights permitting in Oregon, the State has exempted certain groundwater uses from the permit requirements, called domestic groundwater exemptions. These exempt uses are as follows:

1. Stockwatering purposes;
2. Watering any lawn or noncommercial garden not exceeding one-half acre in area;
3. Watering the lawns, grounds and fields not exceeding 10 acres in area of schools located within a critical ground water area established pursuant to ORS 537.730 to 537.740;
4. Single or group domestic purposes in an amount not exceeding 15,000 gallons a day;
5. Down-hole heat exchange purposes;
6. Any single industrial or commercial purpose in an amount not exceeding 5,000 gallons a day; or
7. Land application, so long as the ground water:
   1. Has first been appropriated and used under a permit or certificate issued under ORS 537.625 or 537.630 for a water right issued for industrial purposes or a water right authorizing use of water for confined animal feeding purposes;
   2. Is reused for irrigation purposes and the period of irrigation is a period during which the reused water has never been discharged to the waters of the state; and
   3. Is applied pursuant to a permit issued by the Department of Environmental Quality or the State Department of Agriculture under either ORS 468B.050 to construct and operate a disposal system or ORS 468B.215 to operate a confined animal feeding operation.

ORS § 537.545(1). To the extent that the water appropriated as an exempt use is put to beneficial use, the appropriator gains a right to use the water which is equal to that of a certificated right to appropriate groundwater.

ORS § 537.545(2). This is important due to the Prior Appropriation system, which Oregon follows.

The Prior Appropriation Doctrine states that the “first in time is first in right.” Therefore, water rights are administered under a hierarchal system based on the date of priority of the water right. Senior users have rights that are superior to junior users, and seniors may take their water first, even forcing junior users to cease withdrawals in times of water shortage. ORS 537.545(2) confers on exempt groundwater uses a legal status which may be administered within the Prior Appropriation system because it grants exempt uses a legal status that is equal to permitted uses.

Although the groundwater uses discussed above are exempt from permitting, that does not mean that no requirements apply. The Department may require any groundwater user, either permitted or exempt, to submit information about the well use. ORS § 537.545(3). Exempt appropriators who drill wells must submit tax lot maps indicating the location of the wells to the Department. They must also register the exempt uses with the Department within thirty days of completion of well construction, along with a $300 recording fee. ORS §§ 537.545(5)-(7).

III. Exempt Groundwater Provisions in Other Western States

There is a long-standing tradition among western states to exempt domestic uses of groundwater from permitting requirements. In fact, Utah is the only western state which does not relax its requirements for domestic groundwater uses, thus requiring all groundwater uses to go through the same permitting process. This section examines exempt domestic groundwater uses in several other western states.

A. Washington

Washington exempts stockwatering, watering of lawns or non-commercial gardens not exceeding a half-acre in area, and single or group domestic uses not exceeding 5,000 gallons a day as domestic exempt uses of groundwater. Revised Code of Washington (“RCW”) § 90.44.050. Similar to Oregon, domestic exempt uses have the same legal status as permitted uses, so long as water is continuously put to beneficial use. Id. Also as in Oregon, the Washington Department of Ecology may require domestic exempt users to submit information about the water use, including the method and quantity of withdrawals. Id.

Washington is unique in that it allows appropriators to choose whether to file an application for a permitted groundwater use, or whether to merely file a declaration for an exempt groundwater use. Id. Although permitted and exempt rights are arguably of the same legal status, this decision may affect an appropriator’s priority under the Prior Appropriation Doctrine. This consequence is discussed infra in Section IV.

B. Nevada

Nevada also recognizes exempt domestic uses, and defines “domestic use” to include culinary or other household purposes of a single-family dwelling, watering a family garden or lawn, and providing water to livestock or domestic animals. Nevada Revised Statutes (“NRS”) § 534.013. Group domestic groundwater uses may also be exempt from permitting, however, such users must apply to the Nevada State Engineer for a waiver of the typical permitting requirements. A waiver may be granted so long as (1) the well existed on or before July 1, 1983; (2) it is used solely for domestic purposes by no more than three single-family dwellings; and (3) each dwelling uses no more than 2 acre-feet of water annually. NRS § 534.185(1).

In Nevada, like Oregon and Washington, the State Engineer has authority to require well monitoring, well metering, and registration of exempt domestic uses in certain water basins. NRS § 534.180(2). Additionally, the State Engineer may require an exempt domestic groundwater user to cease withdrawals from their exempt well if water becomes available through a political subdivision of the State, or through a public utility so long as the charge for connecting to the service is less than $200. NRS § 534.180(3).

C. Idaho

Idaho exempt domestic uses includes water for homes, for organizational camps, public campgrounds, livestock, and other uses associated with those uses, including irrigation of not more than one-half acre of land. Idaho Code (“IC”) § 42-111. The use may not exceed 13,000 gallons of water per day. Id. But unlike the states discussed thus far, exempt uses in Idaho are also exempt from fees and measuring and reporting requirements. IC §§ 42-221(K)(1); 42-701(7). However, the Idaho Department of Water Resources and Department of Environmental Quality have authority to inspect exempt wells. IC § 42-701(7).

D. New Mexico

New Mexico does not have an exemption for domestic groundwater uses per se, but the State Engineer lacks the authority to deny applications for domestic appropriations. New Mexico Code of Regulations (“NMCR”) 1978 § 19.27.5.9(D). Thus, once an applicant submits an application to the State Engineer describing the domestic use, the State Engineer must issue the permit. Id. The State Engineer retains the authority to deny applications if the well is located in a limited-use area, and may deny an application due to water quality concerns. NMCR § 19.27.5.13A.

In New Mexico, domestic uses include irrigation of one acre or less of non-commercial trees, lawn or garden, or “other” domestic use. New Mexico Statutes Annotated (“NMS”) 1978 § 72-12-1.1. Providing water to livestock is not considered a domestic use. New domestic uses have been limited to one acre-foot annually per household, or three acre-feet annually for group domestic uses. NMCR § 19.27.5.9(D).

IV. Exempt Groundwater Uses vs. Permitted Uses

Oftentimes in the West, water disputes regarding interference come down to the issue of priority. Who has the senior use? And thus, whose interest must yield to the other?

Priority is a key tenet of western water law, and the priority date of an appropriation is critically important. Generally, the priority date of a water right will be fixed by the date of application for permit. Because exempt domestic groundwater appropriations do not go through the typical permitting process, they are not assigned a priority date in the same fashion as permitted water uses. This presents a problem for administering water right conflicts. Therefore, many states have set priority dates for domestic exempt uses by statute.

A. Priority Dates for Permitted and Exempt Uses

In Oregon, as most western states, the priority date for permitted or certificated groundwater uses is the date the application was received by the Department. ORS § 537.150(2). Although exempt groundwater uses generally are not assigned priority dates, if it becomes necessary for the Department to regulate the distribution of water between users, then the Department will issue a priority date based on the well log for the exempt well, or other evidence provided by the well owner that proves when water was first used. ORS § 537.545(4).

Nevada sets priority dates for permitted and certificated rights at the date of application to the State Engineer’s office. NRS § 534.080(3). The priority date for domestic exempt groundwater uses is the date of completion of the well, which may either be proved by producing the well logs of the well driller, which are filed with the State Engineer, or by other documentation or evidence provided by the State Engineer. NRS § 534.080(4). In this way, Nevada’s statute differs from Oregon’s in that in Oregon the exempt use priority date is based on when use first occurred, while in Nevada well completion, without a showing of use, controls.

Permitted and certificated water rights in Washington likewise have priority dates based upon the dates the original applications were submitted to the Department of Ecology. RCW § 90.03.340. As in Oregon, the priority date of exempt groundwater uses is based on the date the water was put to beneficial use. RCW § 90.44.130. However, because Washington allows domestic groundwater users to choose between applying for a permit or appropriating water as an exempt user, some domestic groundwater users will have priority dates based upon the date of application to the Department of Ecology. RCW § 90.44.050.

In Washington, whether to apply for a permit or to merely begin appropriating as an exempt user is an important choice. A permitted use gains a priority date based upon the date of application, before any construction or use occurs. An exempt use is issued a priority date based on when beneficial use of the water was first made, a date which may be significantly later than the date on which application could have been made.

In Idaho, the priority date for permitted and certificated water rights is again the date of application to the Idaho Department of Water Resources. IC § 42-202(1). As in Oregon and Washington, the priority date set for exempt domestic uses is the date that water is actually withdrawn and used. IC § 42-227.

In New Mexico, all groundwater uses require application to the State Engineer, however, the State Engineer is obligated to approve domestic groundwater applications. NMCR 1978 § 19.27.5.9(D). Thus, all rights are permitted rights, and the date of priority is based on the date of application to the State Engineer. Id.

B. Regulating Domestic Exempt Uses

Water must often be administered due to conflicts between water users. When a user conflict occurs, generally the senior water right holder will call the state watermaster or state engineer and request that the state regulate the other user’s water withdrawals. Regulation often involves ordering the junior user to cease withdrawals at times when the water resource is insufficient to meet both appropriators’ needs. This process is known as making a delivery “call” on the water.

1. Delivery Calls

In at least one state, exempt domestic groundwater uses are partially exempt from delivery calls. In Idaho, delivery calls are not effective when made by a senior permitted or certificated water right holder against a domestic exempt groundwater user. Idaho Administrative Procedure Act (“IDAPA”) § 37.03.11.20.11. The only exception to this rule is when another domestic exempt groundwater user suffers material injury, in which case a call against the exempt domestic groundwater use will be effective, and the watermaster may regulate the exempt uses. Id. Idaho’s policy for regulating domestic exempt groundwater uses against permitted or certificated uses evidences the state’s protective policy toward domestic exempt uses.

Unlike Idaho’s policy favoring exempt domestic groundwater uses, in Washington exempt uses are strictly enforced according to priority to make sure they do not adversely affect other water rights. The Washington Department of Ecology often regulates domestic exempt groundwater uses in favor of senior water right holders and in-stream flow requirements which may be detrimentally affected by the exempt groundwater withdrawals. See Washington Department of Ecology,State Water Use Laws: Compliance and Enforcement, available at:http://www.ecy.wa.gov/programs/wr/comp_enforce/gwpe.html.

New Mexico’s laws provide for the creation of Domestic Well Management Areas in areas where a hydrological connection between surface water and groundwater has been established. The designation of a Domestic Well Management Area permits the State Engineer to protect surface rights by creating guidelines which limit additional diversions or withdrawals that affect senior rights. See Bracken, Western States Water Council, Exempt Well Issues in the West, 173 (2010), available at: http://aquadoc.typepad.com/files/exempt_wells_in_the_west_n_ bracken.pdf. To date, however, no Domestic Well Management Areas have been created. Id.

2. Preferences

Although in most western states calls against domestic exempt groundwater uses will be effective, some states have created preferences for different categories of water use, which may protect domestic uses above all others in times of water shortage. These policies alter the traditional “first in time” doctrine which is so central to the Prior Appropriation Doctrine, and recognize the need to veer away from the traditional doctrine when human survival is at stake.

In Oregon, during times of declared drought, the Oregon Water Resources Commission may grant a preference to rights for human consumption “[n]otwithstanding the priority of water rights.” ORS § 536.750. Additionally, when two or more proposed uses of water directly conflict or when there is insufficient water to support all uses, the Department may give first preference to proposed appropriations for human consumption and second preference to livestock uses over all others. ORS § 536.310(12).

Idaho’s state constitution recites a preference for certain water uses in times of scarcity. Idaho Constitution, Article 15, Section 3. The Constitution provides that domestic uses have the highest priority, followed by agricultural uses and mining. Id. Preferred uses may jump ahead of other senior uses, but such actions are subject to Idaho’s laws related to takings of private property for public use, including the requirement of paying just compensation for the taking. Id; Basinger v. Taylor, 30 Idaho 289, 294-95 (1917).

3. Limited Basin Designations

Many water basins in western states are fully subscribed, meaning the state has determined that water is not available in the basin for further appropriations. However, because most western states do not require permits for exempt domestic groundwater uses, limiting the drilling of new exempt domestic wells can present a challenge for the states. Some states have created basin-wide limitations which effect domestic exempt groundwater users.

As discussed above, the New Mexico State Engineer has the power to deny domestic groundwater permits based on the designation of limited-basin areas due to governmental concern about water quality in the basin. NMCR § 19.27.5.13A. This is an important power due to the fact that the State Engineer in New Mexico may not otherwise deny domestic groundwater applications. NMCR 1978 § 19.27.5.9(D).

In Oregon, the Oregon Water Resources Commission (“the Commission”) may designate Critical Groundwater Areas when groundwater levels or quality decline. ORS § 537.730(1). This designation allows the Commission to regulate all wells in the basin, including exempt domestic wells, to order the discontinuance of wells under certain circumstances, and to prohibit the drilling of new wells within the area. ORS § 537.775.

4. Race to the Bottom

In many states, the elevation of water is not protected by an appropriator’s permit or certificate. Thus, the appropriator cannot rely on a certain water level for diversion or withdrawal. For instance, an Oregon administrative rule provides that an appropriator is “obliged to maintain a functional point of diversion,” and a watermaster has no obligation to increase flows to overcome the elevation of a point of diversion. Oregon Administrative Rule (“OAR”) § 690-250-0030. “The appropriator shall be responsible for diversion and conveyance of water from the natural source to the place of use.” Id. Many states have similar provisions related to the withdrawal of groundwater, and these provisions oftentimes create a “race to the bottom” for appropriators.

However, in Idaho, groundwater use is additionally moderated by the Reasonable Use Doctrine. Idaho’s water code states that the Prior Appropriation Doctrine’s principle of priority “shall not block full economic development of underground water resources. Prior appropriators of underground water shall be protected in the maintenance of reasonable ground water pumping levels as may be established by the director of the department of water resources as herein provided.” IC § 42-226. Therefore, water users of a similar groundwater source must be regulated to maintain reasonable groundwater levels, as set by the Department of Water Resources. This protects Idaho groundwater users from engaging in a race to the bottom, which often proves costly for all involved.

Part of Nevada’s policy concerning domestic wells is to “protect their supply of water from unreasonable and adverse effects.” NRS § 533.024. In accordance with this principle, municipal, quasi-municipal and industrial permit applicants must give notice to domestic groundwater users who are located within 2,500 feet of the proposed well if the expected rate of diversion is one-half cubic foot per second or more. NRS § 533.360(3). The effect of this notice is to alert domestic groundwater users of proposed appropriations in order to allow protests based on possible interference with domestic groundwater wells. The State Engineer may deny new groundwater permits which would interfere with existing domestic exempt wells. NRS § 533.370(5). The procedures offer significant protection to domestic exempt groundwater users.

V. Trends in Land Patterns and Water Use

During the settlement of the West, surface water resources were utilized first because of the lack of knowledge about groundwater resources and the relatively higher costs associated with using groundwater sources. However, as surface sources became fully subscribed in the 20th Century, people turned more and more to groundwater resources for their water needs. In fact, dependence on groundwater has grown so dramatically that many groundwater basins have also become fully subscribed, thus causing states to close the basins to any further appropriations. See e.g., Oregon Water Resources Department, Critical Groundwater Allocations, available at:http://www.wrd.state.or.us/OWRD/GW/gw_critical_allocations.shtml. See also, Waters and Water Rights, Vol. 2, § 18.05 (Robert E. Beck ed., 3rd Edition).

Domestic exempt groundwater uses of water create a potential loophole around groundwater basin closures because they do not require permitting. Thus, a permit in a closed basin for a domestic groundwater use may not be denied because a permit is not required. This situation can present regulation challenges. Although some states currently designate critical or limited groundwater areas in which further appropriations are prohibited – see discussions about Oregon and New Mexico, above – not all states have such laws or regulations providing for basin closures, and so regulation becomes much more difficult.

Domestic uses currently account for a very small percentage of total water use in the United States. For example, in Oregon domestic uses account for less than 6% of total water use. Oregon Public Broadcasting, The Oregon Story, available at: http://www.opb.org/programs/ oregonstory/water/or_water/page_3.html. However, domestic uses are poised to become much more prevalent in the future.

Throughout the West, lands traditionally utilized as farmland are being converted to other uses, including residential uses, at alarming rates. Western Water Policy Review Advisory Commission, Water in the West: The Challenge for the Next Century 2-28 to 2-30 (June, 1998). In addition, in the West water rights which are appurtenant to lands may be severed and sold separately from the land. Thus, the general trend of converting farmland to residential land, severing the water rights and selling the water separately, and then serving the newly residential land with domestic exempt wells means that developers may greatly contribute to the explosion of domestic exempt uses.

VI. State Reactions to Curtail Exempt Groundwater Uses

In a radical reaction to exempt domestic groundwater permitting, a New Mexico court recently held that the state’s permitting process for domestic groundwater uses, which provides that the State Engineer must approve, violates the due process rights of senior water right holders, thus making the statute unconstitutional. Bounds v. New Mexico, Case No. CV-2006-166, slip opinion (July, 10 2008). The court concluded that the State Engineer must use the same analysis for approving or denying domestic groundwater applications as other groundwater applications. Id. The State Engineer appealed the ruling, and the appellate court reversed. However, the case is a prime example of how far parties and courts are willing to go in the face of exempt groundwater uses. This case may prove to be a “test case” for other jurisdictions.

In Oregon, the reaction to exempt domestic groundwater uses has not been so severe. As discussed above, Oregon’s designation of Critical or Limited Groundwater Areas provides substantial means for the state to curtail exempt uses within those areas. Such a designation gives the state the authority to regulate all wells in the basin, including exempt domestic wells, to order the discontinuance of wells under certain circumstances, and to prohibit the drilling of new wells within the area. ORS § 537.775. Once a Critical Groundwater Area is designated, water uses in the basin are essentially “locked down” so that uses may not easily be changed, and new uses may not be allowed. Until the time that such a designation is lifted, people seeking to use groundwater as an exempt domestic user may run up against a brick wall.

Additionally, the Oregon State Legislature has made many attempts to curtail exempt groundwater uses through limiting legislation. In 2009, the Legislature introduced a bill that would have reduced the total amount of water that can be used for group domestic uses from 15,000 gallons per day to 1,000 gallons of water per day. House Bill 2859 2009, text available at: http://www.leg.state.or.us/09reg/measpdf/hb2800.dir/hb2859.intro.pdf. The bill was not enacted by the Legislature, but similar bills are likely to return in future sessions.

Finally, Oregon has started a pilot program entitled the “Neighborhood Ground Water Network,” which is aimed at providing groundwater management techniques to landowners in the Eola Hills Ground Water Limited Area. Oregon Water Resources Department, available at: http://www.oregon.gov/OWRD/GW/NGWN_faq.shtml. The program creates a voluntary association of landowners who are taught principles of groundwater science in order to allow the landowners to better manage their consumption and prevent overuse in the future. Id.

VII. Conclusions

In the West, exemptions from the permitting process for domestic uses of groundwater have become commonplace. This may be due in part to the tradition of western settlers appropriating water necessary for settlement, and in part to the importance of making sure water is available for critical domestic uses without too much bureaucratic interference. However, with the onset of transformed land uses in the West, and increasing demand, has also come the concern that domestic exempt uses could pose a serious threat to existing water rights, and future water supplies.

In Oregon, the state regulates exempt groundwater rights alongside permitted and certificated water rights in terms of priority. Oregon has passed legislation which allows the state to regulate off domestic exempt groundwater uses when diminishing groundwater supplies requires such regulation. Finally, Oregon has attempted to pass legislation which would limit the amount of water which may be used by an exempt groundwater user. These attempts at limiting the effect of exempt groundwater uses are not unique to Oregon. Rather, other western states have taken similar actions.

Although exempt groundwater rights have the potential to create a large loophole in western water administration, western states are quickly closing the regulatory gap and subjecting exempt groundwater uses to more and more regulation. So many restrictions and conditions have been placed on exempt groundwater uses as of late that one wonders: can exempt groundwater uses really be considered “exempt” anymore?