The foundation of all water transactions is an understanding of the water rights involved in the deal. In basins that have reached final adjudication, this process is as easy as reading a piece of paper. Unfortunately, in most western states the paper water rights and the physical water appropriated fail to match. Under this scenario, water right due diligence is a necessity. The overall objective of the due diligence process is to determine a water right’s historic beneficial use. It is this historic and continuous use that defines water rights under the “first in time, first in right” priority system. Because of water’s dynamic physical characteristics, the method for water right due diligence varies. In general, the process involves the combination of paperwork and ground truthing.
Paperwork due diligence consists of researching any records that document the historic use of the water right. This includes:
1. Legal documents
2. Crop/harvest receipts
3. Pumping records
4. State water right files
5. Water manager reports/notes
6. Property deeds
7. Legal letters
8. Affidavits of water use
10. Topographic maps
11. Aerial photographs
12. Water use surveys
13. NRCS information
14. Irrigation logbooks and diaries
15. Any additional, information that helps document historic use.
In addition to the paperwork, ground truthing the water use is essential to verify the water right. The primary objective of ground truthing is to decipher the differences between the paperwork and the water use on the property. This process generally starts by meeting with: agency officials, water managers, current water right users, and neighboring water users. In addition to these meetings, evaluating water use on the property and taking inventory of the irrigation infrastructure will also provide vital information. Documenting all places of use, points of diversion, and conveyance structures with GPS points on the ground will provide the data needed to create GIS maps that accurately define the water rights.
The due diligence process will authenticate the parameters of the water right (priority date, purpose, acres, source, point diversion, flow rate, volume, and place of use) with accurate historic use numbers. This action will validate the water right’s integrity and provide a solid basis for potential transactions. Without this detail and understanding, buying or selling unadjudicated water rights in the West represents a significant risk.