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.