## Facts

- The Oregon Water Resources Department (WRD) issued the City of Cottage Grove a permit to divert water from the Row River for municipal use, conditioned on completing construction and applying water to full beneficial use by October 1, 1980.
- The city did not meet the deadline and obtained multiple WRD extensions over several decades.
- In 2008, WRD proposed another extension (to October 1, 2013); WaterWatch protested and obtained a contested-case hearing before an administrative law judge, who largely upheld WRD’s proposal.
- Immediately before the proposed final order, the city diverted water at the maximum authorized rate for about six hours and relied on that event to show application of water to full beneficial use and municipal demand.
- After the contested-case proceeding, WRD issued a water-right certificate based in part on the six-hour diversion episode.
- WaterWatch sought judicial review, arguing that WRD (1) unlawfully treated the six-hour diversion as sufficient beneficial use and (2) failed to apply statutory and permit conditions, including water management and conservation planning requirements and instream/fish-protection considerations.

## Issues

1. Whether WRD could treat a short, engineered six-hour diversion at the maximum permitted rate as “beneficial use” sufficient to support certification of a municipal water right and justify further extension of time.
2. Whether WRD correctly interpreted and applied statutes and permit conditions governing municipal permits and extensions, including requirements for due diligence, an approved water management and conservation plan, and consideration of instream and fish-protection conditions.
3. Whether WRD’s order was supported by substantial evidence and included a legally sufficient explanation and findings under Oregon administrative law.

## Decision

- The Oregon Court of Appeals reversed WRD’s orders granting the extension and issuing the certificate and remanded for further proceedings.
- The court held that WRD’s reliance on the six-hour diversion to establish beneficial use was inconsistent with the statutory concept of beneficial use as an actual, sustained use, and was not supported by substantial evidence.
- The court concluded that WRD failed to demonstrate, through adequate findings and reasoning, that statutory and permit-based requirements (including planning/conservation and fish-protection considerations) were applied in the extension and certification decisions.

## Legal Principles

- Beneficial use is the basis, measure, and limit of a water right; perfection requires actual beneficial use rather than a one-time diversion staged to create a record.
- An agency deciding whether to extend time to perfect a municipal water right must apply all governing statutory criteria and relevant permit conditions, including diligence and compliance requirements.
- Municipal water management and conservation planning obligations must be meaningfully addressed in agency decisions affecting extension and certification; an agency may not treat those requirements as optional.
- Environmental and instream-protection conditions imposed by statute or permit must be considered and integrated into the agency’s decision-making process.
- Under Oregon administrative law, final orders must be supported by substantial evidence and must include a concise and explicit statement of underlying facts and reasoning sufficient to permit judicial review.

## Conclusion

The court set aside WRD’s extension and certification decisions because a brief maximum-rate diversion did not establish the sustained beneficial use needed to perfect a municipal water right and because WRD’s order did not adequately show compliance with statutory planning and fish-protection duties or provide sufficient evidentiary support and explanation.


WaterWatch of Or., Inc. v. Water Res. Dep’t, 259 Or. App. 717, 316 P.3d 330 (Or. Ct. App. 2013)