Here is info from the Oregon Boating Manual on the subject: (yeah I know an old dead post brought to life, but I thought it might help someone here in Oregon).
Chapter 4: The Legal Requirements of Boating Other Equipment
Diver-Down Flags
Federal law requires that scuba divers or snorkelers on federally controlled waters display the Alfa diver-down flag to mark their diving area. Two types of flags are used to indicate diving activity. (this is specific to the vessel)
A blue and white International Code Flag A (or Alfa flag), at least 3.3 feet (one meter) high and visible from all directions, must be displayed on vessels whenever these vessels are restricted in their ability to maneuver by the diving operation. This flag indicates that the vessel is involved in a diving activity.
A rectangular red flag, at least 15 x 15 inches, with a white diagonal stripe is used to indicate the presence of a submerged diver in the area. Display of this flag is not required by Oregon law and does not in itself restrict the use of the water; however, boaters should always use caution and slow to “slow, no wake speed” (maximum 5 mph) when operating within 200 feet of a displayed flag.
Scuba divers and snorkelers should not place a flag in an area already occupied by other boaters or in a waterway less than 300 feet wide. Divers also should follow all of the water safety rules themselves.
Oregon Administrative Rules OAR 250-021-0030 states:
(7) No person shall operate a personal watercraft in excess of a slow no wake, maximum 5 MPH speed:
(a) Within 200 feet of a boat launch ramp, dock, swim float, pier, marina or moorage, floating home or boathouse, or locations where persons are working at water levels on floats, logs or waterway construction;
(b) Within 200 feet of a swimmer, surfer, diving flag, bank or wading angler;
(c) Within 100 feet of any anchored or non-motorized vessel;
(d) Except on safe take-offs and landings, personal watercraft shall not operate in excess of a slow no wake, maximum 5 MPH speed within 200 feet of shoreline on all lakes, bays and reservoirs. A safe take-off or landing will not be considered "safe" unless it can be accomplished without risk to any swimmer or craft within 200 feet from shoreline.
Kjay