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A Commodity Most Precious
How Water Law Impacts Ranching
Beef magazine
March 2004

On the face of it, ranchers make their living selling beef. But in many ways, what they're really selling is water converted by Mother Nature into grass, which is then converted into beef.

For that reason, laws that govern water distribution are often the most important legal issue facing any ranch. That's particularly true in the arid West where available water has been cut by drought and surging population growth is pitting urban centers against agriculture for what's left.

BEEF asked three water law specialists for their views on water law. Here are some issues they raised.

Water law from the Great Plains to the Pacific Ocean is largely governed by the law of prior appropriation, which fixes water rights on a first-come, first-served basis. This provision often helps ranchers because their water rights predate those held by cities and towns. In a crunch, the rancher gets the water.

But those rights can be forfeited under "use it or lose it" provisions found throughout the West. If a ranch goes too long without using all or part of its water rights — and the statutory period varies from state to state — the ranch can lose the unused rights. This problem tends to show up during drought when ranchers sell off stock and need less water.

"I've seen absolutely tragic circumstances where ranchers have ceased using their water rights and then found they no longer had them," says Rick Knuth, a Salt Lake City, UT, attorney specializing in water law. The loss of water rights creates two problems. First, the ranch has less water when it needs it. Second, the loss of water rights reduces the value of the property.

"There are a number of ways to prevent this," he adds. "Use all the water all the time, or use all of it at least once during the statutory period. You can also lease it to somebody else who will use it. Or you can apply to the state engineer for an extension of the statutory period for not using the water."

If a rancher is lucky, under-use won't be discovered. But there's always the danger a rancher will inadvertently call it to the attention of state officials. For example, if the rancher decides to sell his land, the state may audit past water use.

"At that point, the state will come in and count up the number of irrigated acres and the number of cows," says Dan Jensen, a Salt Lake City water law attorney. "They will use that as a basis for determining the water to which the land is entitled."

In the West, there isn't as much water as there are water rights. "Paper water rights exceed the supply," Jensen says. "If everybody got what they were legally entitled to, there would probably be a meltdown. There's not that much water to go around. We have this problem in Utah and it's probably the same throughout the West."

One problem when water rights exceed the supply is that it gives state officials an incentive to invoke the use-it-or-lose-it provision to try to get water rights more in line with actual supplies.

In a drought, temporary transfer of water rights makes a lot of sense. Ranchers who don't need as much water because they've reduced the herd can earn needed cash by transferring unused rights for a specified period of time. Meanwhile, the water goes to cities and towns struggling to meet demand.

But the laws in many states make this a messy process.

"This is an area where tweaking the water laws could benefit everyone concerned," says Reed Benson, University of Wyoming associate professor of law. "It can be a procedural nightmare to get these temporary transfers approved."

This problem varies by location, Bensen says. For instance, transfers are quick and easy in areas served by the Colorado-Big Thompson Water Project along Colorado's Front Range of the Rocky Mountains. In other parts of Colorado and the West, however, it can be time-consuming, burdensome and by no means certain that a temporary transfer will be approved.

"More flexibility in the system can be one of the most effective ways of dealing with drought," Benson says. The alternative is to try to boost water supplies in a drought, a solution that's probably doomed to fail.

"It takes a long time to build new impoundments," Benson says. "By the time you get them ready to store water, the drought is over. You want something that works while you're still in the drought."