We frequently have landowners that come to us with the concern of what happens if their farm tenant overpumps a water right. We acknowledge that this is a very valid fear that we have encountered numerous times.
A “black mark” can go on a water right when it is overpumped. For first time instances the Division of Water Resources (“the DWR”) usually just issues a letter and a fine. However, for repeated and serious violations, a water right can potentially be forfeited. Thus, it is a very big deal if a water right is consistently overpumped.
We commonly see the problem happen when the landowner lives out-of-state and has less ability to “police” the tenant’s stewardship of the property. In situations where the landowner is completely innocent and unaware of the tenant’s actions, the DWR has still taken the position that a landowner is responsible for the actions of the landowner’s agent. Thus, the moral of the story is to pick your tenant very carefully.
Additional precautions can be taken to help guard against the above scenario. We have drafted language that can be put into a robust farm lease to help ensure that the tenant takes every precaution not to fall out of compliance with the water right. A good, independent farm manager can also help to monitor the tenant’s actions. There are several companies that offer this service. Indeed, the overpumping of a water right is a significant concern that must be properly addressed by the landowner.
Owners of water rights are frequently surprised to find that their water rights are partially owned by others. The awareness of this problem most often arises when the obvious owner applies for a change in the right—such as permission from the Division of Water Resources to drill a new well.
It is at this time that they learn the unexpected news: that many years ago the place of use was set up to include land also owned by someone else. Such a situation causes the current owner of the previously unknown “place of use” to have an interest in the right.
To avoid such unpleasant surprises we recommend some of the following steps. If land, including a water right, is being purchased have the right examined for title and ownership purposes. It is preferable to have the examination completed by a competent water law attorney. Title insurance does not include any detailed analysis of a water right. It is not insured under the normal policy.
As to land under common ownership which has been irrigated for many years, the same examination by a competent water law attorney is warranted.
When such extraneous ownership is discovered, or is known, there is great merit in working to clear the records so that such ownership is eliminated. The Division of Water Resources responds affirmatively to (1) agreements among owners and (2) court orders. Agreements are usually much less expensive. Court orders can be arduous processes to obtain.
Planning up front is thus critical to avoid unexpected expenses and surprises. In this case, an ounce of prevention is worth many acre feet of cure.