The Oregon Water Code provides that construction of a water system must be completed within certain time limits from issuance of water use permits (5 years for non-municipal water use permits, and 20 years for municipal permits). ORS 537.230 (“…the holder of a water right permit shall prosecute the construction of any proposed irrigation or other work with reasonable diligence and complete the construction within a reasonable time, as fixed in the permit…”); ORS 537.630. The same provisions allow the Oregon Water Resources Department (“the Department”) to grant extensions of time for completion of construction.
The Oregon Water Code also provides that water use permits may be cancelled when a permittee fails to begin construction within permit deadlines. ORS 537.410(1) (“Whenever the owner of a permit to appropriate the public waters of Oregon fails to commence actual construction work within the time required by law, or having commenced construction work as required by law, fails or neglects to prosecute the construction work with reasonable diligence, or fails to complete the construction work within the time required by law, or as fixed in the permit, or within such further time as may be allowed under ORS 537.230, or having completed construction work, fails or neglects to apply the water to beneficial use within the time fixed in the permit, the Water Resources Commission may cancel the permit on the records in the Water Resources Department as provided in ORS 537.410 to 537.450.”)
In determining whether to grant an extension of time, the Department considers: 1) the cost of the appropriation and application of water to a beneficial purpose, 2) the good faith of the appropriator, 3) the market for water or power to be supplied, 4) the present demand for the water or power to be supplied, and 5) the income or use that may be required to provide fair and reasonable returns upon the investment. ORS 537.230(3); ORS 539.010(5); see also OAR Chapter 690 Division 315. The Department’s general practice has been to liberally grant extensions of time if the permittee is able to show a financial investment to begin construction and/or water use under the permit and a reasonable explanation for the delay. Permit extension of time applications are available on the Department’s website at: http://www.oregon.gov/owrd/PUBS/docs/forms/App_Ext_WR_perm.docx.
Recently, the Department has added the following condition to new permits: “The deadline to begin construction may not be extended.” Although the new permit condition does not mark a departure from the Oregon Water Code’s provisions, it does mark increased seriousness from the Department about what is necessary to obtain an extension of time to develop a new water use right. Permittees should be sensitive to the change in climate regarding beginning construction and applying water to beneficial use.
Now, more than ever, it will be important to begin construction within the 5-year deadline in order to avoid permit cancellation. “Actual construction” means “physical work performed towards completion of the water system, which demonstrates both the present good faith of the water right permit holder and the water right permit holder’s intention to complete the project with reasonable diligence.” OAR 690-315-0020(3)(d)(A). This does not include planning, securing financing, entering into contracts, surveying, or purchasing (but not installing) equipment. OAR 690-315-0020(3)(d)(B).
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