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FAQS

 

By William M. Turner, Ph.D.

What is a Water Right? 
What is Beneficial Use?
What are Water Markets?
What is Involved in a Water Rights Transaction?
What does WaterBank do?

  
WHAT IS A WATER RIGHT? line 

Simply stated, a water right is the legal right to use the physical supply of available water. The western states generally follow the doctrine of prior appropriations rather than the riparian rights doctrine. The doctrine of prior appropriations comes to us from Islamic and Roman Law, and American frontier common law. The riparian rights doctrine comes to us through the English Common Law. 

The doctrine of prior appropriations holds that the party who first used the available water has the better right to continue his use. It is an arid lands doctrine that recognizes the scarcity of water. 

The riparian rights doctrine, which developed in wet climates, holds that any party who owns land contiguous to a stream or river has a right to divert water to his property for his use. Generally, there is no priority of ownership. 

Some states have mixed rights. Both doctrines disallow wasteful uses of water. 

The doctrine of prior appropriations grew up in the American west as a result of several different situations. One was the issuance of grants of land and water to settlers by the King of Spain and his representatives, and after 1821 by the Mexican Government. The rule of frontier law, so to speak, was that the party with the older grant had the better boundaries and the better right to water, provided water was specifically given in the grant. 

The other path by which some states come to the doctrine of prior appropriations was through the need for water during the gold rush. Placer gold operations needed water to wash away sand and gravel to leave the gold behind in sluice boxes. The first party to divert water from the river had the better right to continue his use. Needless to say, the inability to divert water made some otherwise rich claims worthless. 

A water right grants the legal right to use the physical supply of water but not an ownership interest in the water itself. Only after water has been placed to beneficial use does a property right vest. It is only the property right that is saleable. Beneficial use is, therefore, central to the ownership of a water right. Many states consider water rights real property.

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WHAT IS BENEFICIAL USE? line 

Beneficial use is generally not defined, but it usually involves an economic or life-sustaining activity where some of the water is consumed. Several examples may help to clarify this. 

Water that is used to grow vegetables, make cement, manufacture chemicals, or grow fish in hatcheries is beneficially used. Water that naturally runs in streams and that sustains endangered species is not a beneficial use. 

Water which is pumped from a mine so that minerals can be mined, and which is simply discharged onto the surface and allowed to run away, is not a beneficial use of water. 

Acid mine water that contains dissolved copper and which is diverted to pass through ion exchange columns to remove the copper is not a beneficial use of water. We may say the water is beneficiated but the water is not beneficially used.

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WHAT ARE WATER MARKETS? line 

There has never been a well organized commercial market for water rights in the United States. Those who need water for some beneficial purpose look for those who want to sell their water rights. Those who want to sell water rights look for those who want water rights. The search, each for the other, is very difficult, despite efforts in some areas to set up water banks. There are few people who specialize in water rights and who can bring buyers and sellers together. 

Texas statutes, for example, allow for water banks. But a recent review of the Texas water bank showed only three buyers, and no sellers. The reason there are not more specialists in this field is that it is a complex business. The reason governmental water banks are not more successful is because it takes much more than listing buyers and sellers to close a transaction. 

A water rights broker must: 

have a technical background to understand the hydrological impact of a proposed transaction on river systems and on other water users. 
have a thorough knowledge of the regulatory process by which water rights are moved and uses reallocated. 
understand the unwritten philosophies of regulators and politicians. 
understand water law and real estate law. 

It is rare to find this combination of skills in one individual. Government operated water banks do not provide this service. 

WaterBank Resources was established by Dr. William M. Turner, a Registered Professional Geologist, Certified Ground Water Professional, and Licensed Real Estate Broker. Dr. Turner is a consulting Hydrologist with more than 35 years experience both nationally and internationally. He has been a member of the editorial board of the Journal of Ground Water. Dr. Turner teaches courses on water rights to real estate brokers and courses on ground-water hydrology to attorneys.  He is the qualifying real estate broker at WaterBank Resources and a recognized expert in water rights transactions. 

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WHAT IS INVOLVED IN A  
WATER RIGHTS TRANSACTION? line 

THE CONTRACT  

Water rights are purchased by buyers who wish to place water to some beneficial use of their own. The beneficial use of the buyer may involve a change in point of diversion of the water and/or a change in the place and/or purpose of use. 

Because water rights are regarded as real property by many states, a sales contract is required.

THE PROCEDURE   

The re-allocation of a water right by a buyer for the use of water at a different location and/or different use will require permission of state authorities. Applications for permits must be filed with state authorities. 

Usually, a notice of intention to move the water rights and/or to change the point of diversion and/or location and/or purpose of use must be published to provide notice to the public. If someone objects to the purpose of the transfer and use, they may file a protest. If no protest is filed, state authorities will operate under their own authority and approve or deny an application. 

If an application is denied, the buyer may petition for a hearing to present evidence to overcome the reasons for denial. If the prospective buyer is denied the application after the hearing, he may seek a trial in District Court. This process may go to the State Supreme Court. 

When a permit is ultimately granted to the buyer, the water rights purchase closes.

THE COSTS    

Sales contracts will normally require that all applications to carry out the purposes of the buyer be paid by the buyer. 

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WHAT DOES WATERBANK® DO?   line 

WaterBank finds buyers and sellers and facilitates water rights transactions for which it earns a commission. 

WaterBank files applications and carries out all aspects of title searches and historical research. 

WaterBank will prepare necessary drawings and provide them to surveyors as CAD or GIS files for final review and certification. 

WaterBank will carry out or will contract for all technical studies necessary to support applications for permits. 

WaterBank expects that water rights will will valid and marketable when they are offered for sale. All costs incurred to file applications and prove up water rights to meet the regulatory requirements of state authorities is charged on a time and materials basis and is apart from brokerage commissions. 

REGISTRATION   

If you are looking for or selling water rights, please fill out the Sellers Registration Questionnaire. You are under no obligation to WaterBank Resources unless you decide to have WaterBank represent you as your broker and agent.

BROKERAGE  

If you wish WaterBank to represent you in a transaction, please download and fill out the appropriate questionnaire. Information from the questionnaire will be used to generate a Buyer or Seller agreement that will be E-mailed to you. The Brokerage Agreement

Print two copies of the agreement, sign, have it notarized, and return both copies for our signature to us at: 

WaterBank®
610 Gold Avenue, Southwest - Suite 111

Albuquerque, New Mexico 87102

CONSULTATION   

WaterBank provides telephonic consultation on water rights transactions at the rate of $250/hr plus telephone and facsimile charges. You must provide us with a written description of your transaction by e-mail or by fax prior to discussing your matter. The average cost for document review and consultation will be about $300, payable in advance.

We may be reached at: 505-246-2232 (fax) or use our Contact form

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