Snopes says this story is almost entirely false
http://www.snopes.com/politics/crime/rainwater.asp
Harrington stored and used water illegally by placing dams across channels on his property and preventing the flow of water out of these artificial reservoirs without obtaining a water right permit. The height of each dam varies; two dams stand about ten feet tall and the third stands about 20 feet tall. The total amount of water collected behind these dams totals about 40 acre feet; enough to fill almost 20 Olympic-sized swimming pools. These man-made reservoirs feature boat docks, boats, and were stocked by Harrington with trout and Bluegill for recreational fishing.
The state first identified Harrington's illegal water use more than ten years ago and initiated enforcement action to discontinue his illegal use of water. After numerous attempts by OWRD and the Watermaster to achieve voluntary compliance, the Department enlisted the assistance of the Oregon State Police in 2002. Citations were issued, and Harrington pleaded guilty to several violations. He was assessed a nominal fine and ordered to drain the three reservoirs, which he did. However, Harrington again closed the headgates in 2004 and refilled the reservoirs. As a result, OWRD and the Oregon State Police submitted reports to the Jackson County District Attorney's Office alleging additional violations of Oregon water law. That office filed misdemeanor charges against Harrington, and in 2008 he pled guilty to one count. He was issued another fine, placed on one year probation, and was again ordered to drain the reservoirs.