A wave of water-related legislation swept through the Oregon Legislature during the 2025 session. The most controversial water-related bills did not end up passing. In particular, there were three bills that would have affected water right transfer applications, two of which would have created additional criteria for the Oregon Water Resources Department (OWRD) to approve a transfer application and would have limited the ability of water users to transfer water rights. However, three important water-related bills did pass, which are discussed below.

Oregon Expands Exempt Well Use for Small Farms (HB 3372)

House Bill 3372 will allow more farms to irrigate a small garden without obtaining a water right. Oregon law (ORS 537.545) allows the use of water from a well for certain purposes and within certain thresholds without obtaining a groundwater right. These are called exempt water uses. Under prior law (ORS 537.545), an exempt well could be used to irrigate up to one-half acre of lawn or garden only if it was noncommercial. This meant any irrigation of crops intended for sale required a water right permit. HB 3372 now allows the use of a well to water a commercial garden (crops grown for sale) so long as it does not exceed one-half-acre and a rate of 3,000 gallons per day.

In effect, this legalizes the common practice of small-scale farmers irrigating market gardens without a water right while placing an explicit daily limit on that use. The law includes important sideboards: the exemption applies to industrial hemp as a crop if the grower has a permit but does not extend to other cannabis plants like marijuana. It also provides that the total groundwater used from an exempt well for commercial/industrial purposes and any watering of a commercial or noncommercial garden must not exceed 5,000 gallons per day in total. Finally, due to local groundwater concerns, the Legislature temporarily excluded the Lower Umatilla Basin Groundwater Management Area from this new commercial garden allowance for two years, giving that area time to address aquifer issues before small well irrigation is allowed there.

From a practical standpoint, this change (effective January 1, 2026) opens opportunities for many Oregon farms, especially small operations that lack water rights. Such farms will now be able to legally irrigate one-half acre of crops for sale using a well without going through the costly and time-consuming water right permitting process.

Oregon Standardizes Contested Case Proceedings (HB 3544)

House Bill 3544, sent to the governor’s desk for signature as of July 1, 2025, if signed into law, will establish a standardized process for contested‑case proceedings under Oregon’s water laws. The bill creates new statutory sections in ORS chapter 536 that require OWRD and the Office of Administrative Hearings (OAH) to implement uniform rules and default timelines for contested cases, including completing a hearing from referral to conclusion within 180 days unless an extension is allowed. The bill includes other measures intended to streamline contested cases, such as specifying that OWRD may utilize a settlement administrative law judge and requiring a protestant to raise an issue with specificity in a protest.

Compared to prior practice—where contested cases often varied by statute, rule, or internal guidance, and could stretch over years or involve inconsistent procedures—HB 3544 provides clearer timelines, formal notice and protest rules, and a push toward settlement over litigation. It amends a suite of ORS provisions (e.g. ORS 537.153, 537.628, 540.520) to set procedural deadlines, and establish consistent contested case procedures. The bill does not require OWRD to refer protests to the OAH for hearing within a particular timeframe. Therefore, it remains to be seen whether the streamlined procedures will reduce OWRD’s contested case backlog and help resolve water right disputes faster.

Oregon Tightens Water Rights Application Process (HB 3342)

House Bill 3342 enacts major updates to Oregon’s water law with significant implications for agricultural operations, particularly those seeking new groundwater rights or transfers. One of the most important changes is the imposition of a strict seven-year development deadline for new water right permits—excluding permits for municipal use. Permit holders now have seven years from permit issuance to complete construction and put water to beneficial use. Holders of water right permits for uses other than municipal use, quasi-municipal use, group domestic, or group domestic expanded that require additional time to complete beneficial use may only apply for a one- or two-year extension of time. Such extension will only be granted if OWRD determines that fish-related conditions have been satisfied and the applicant has demonstrated good cause for the extension.

The bill also introduces a requirement that OWRD complete an initial review of a transfer application, after which OWRD would undertake the steps in its current process to analyze the application and thereafter issue a proposed final order. The transfer application process is already plagued by delays, and creating another process step of an initial review is likely to only increase the time it takes to receive a final order on a transfer application.

The bill requires OWRD to deny or limit changes to the point of appropriation for a groundwater right if the proposed point of appropriation is a source of groundwater that is restricted, unless it is proposed in the same aquifer and critical groundwater area as the existing point of appropriation, there is a water bank, or it is related to an aquifer storage and recovery project.

The bill also introduces several efficiency-focused reforms that will hopefully benefit water users by expediting OWRD’s processing procedures. For example, HB 3342 requires OWRD to accept electronic applications and payment, and it replaces the requirement to publish legal notice in newspapers with weekly digital postings on OWRD’s website for many water right processing steps.

In sum, HB 3342 modernizes Oregon’s water right processing and simultaneously requires that water users more diligently develop their water rights.

This article summarizes aspects of the law. This article does not constitute legal advice. For legal advice for your situation, you should contact an attorney.