diff --git a/models/wrf_hydro/create_identity_streamflow_obs.f90 b/models/wrf_hydro/create_identity_streamflow_obs.f90
index aeaa661996..2479f21e31 100644
--- a/models/wrf_hydro/create_identity_streamflow_obs.f90
+++ b/models/wrf_hydro/create_identity_streamflow_obs.f90
@@ -66,7 +66,7 @@ program create_identity_streamflow_obs
 integer,  parameter :: NUM_COPIES      = 1      ! number of copies in sequence
 integer,  parameter :: NUM_QC          = 1      ! number of QC entries
 real(r8), parameter :: MIN_OBS_ERR_STD = 0.1_r8 ! m^3/sec
-real(r8), parameter :: MAX_OBS_ERR_STD = 100000.0_r8 
+real(r8), parameter :: MAX_OBS_ERR_STD = 1000000.0_r8 
 real(r8), parameter :: NORMAL_FLOW     = 10.0_r8
 real(r8), parameter :: contract        = 0.001_r8
 
@@ -104,7 +104,7 @@ program create_identity_streamflow_obs
 real(r8),                       allocatable :: discharge(:)
 
 character(len=IDLength),        allocatable :: desired_gages(:)
-integer         :: n_wanted_gages
+integer         :: n_wanted_gages, n_desired_gages
 real(r8)        :: oerr, qc
 integer         :: oday, osec
 type(obs_type)  :: obs
@@ -209,9 +209,18 @@ program create_identity_streamflow_obs
 call init_obs(obs,      num_copies=NUM_COPIES, num_qc=NUM_QC)
 call init_obs(prev_obs, num_copies=NUM_COPIES, num_qc=NUM_QC)
 
-n_wanted_gages = set_desired_gages(gages_list_file)
+! MEG 6/29/23 [Commented out set_desired_gages(gages_list_file)]
+! Collect all the gauges: 
+! - desired ones will have the provided obs_err_sd
+! - remaining gauges are dummy with very large obs_err_sd
+
+n_desired_gages = set_desired_gages(gages_list_file)
+n_wanted_gages  = 0 !set_desired_gages(gages_list_file)
 call find_textfile_dims(input_files, nfiles)
 
+print *, gages_list_file
+print *, 'n_wanted_gages: ', n_wanted_gages
+
 num_new_obs = estimate_total_obs_count(input_files, nfiles)
 
 inquire(file=output_file, exist=file_exist)
@@ -316,12 +325,21 @@ program create_identity_streamflow_obs
       if (indx == 0) cycle OBSLOOP
 
       ! relate the physical location to the dart state vector index
-      dart_index = linkloc_to_dart(lat(indx), lon(indx))
+      dart_index = linkloc_to_dart(lat(indx), lon(indx)) 
+
+      ! desired gauges get the provided obs_err
+      ! remaining ones are for verification purposes
+      if (ANY(desired_gages == station_strings(n))) then  
+        oerr = max(discharge(n)*obs_fraction_for_error, MIN_OBS_ERR_STD)
+      else 
+        oerr = MAX_OBS_ERR_STD
+      endif
 
+      ! MEG: 6/29/23 [Commented out, oerr is conditionally computed now]
       ! oerr is the observation error standard deviation in this application.
       ! The observation error variance encoded in the observation file
       ! will be oerr*oerr
-      oerr = max(discharge(n)*obs_fraction_for_error, MIN_OBS_ERR_STD)
+      !oerr = max(discharge(n)*obs_fraction_for_error, MIN_OBS_ERR_STD)
 
       ! MEG: A fix to not crush the ensemble in a no-flood period (stagnant water).  
       !if ( discharge(n) < NORMAL_FLOW ) then