California Court of Appeal Reviews Who Owns the Water Rights: Mutual Water Companies or Its Landowner Members?

By Professor David Sandino

Public water agencies are by far the largest sources of water supply for domestic, commercial, and agricultural users. However, before public agencies emerged on the scene at the end of the 19th century, private organizations often in the form of “mutual water companies” were the most common way to deliver water to community of users. There are still over 600 companies in existence today delivering water to over a million people and farms. These companies deliver water to their shareholders or members, often with the advantage of a shared water source and infrastructure. Despite their importance, there are few modern appellate cases involving mutual water companies. When one is issued, it is newsworthy.

Last March, the 2nd District Court of Appeal addressed the issue of whether a mutual water company in Ventura County owned the collective groundwater rights of its members or whether those rights were retained by the members themselves, all underlying landowners. (Las Posas Valley Water Rights Coalition v. Ventura County Waterworks District No. 1, No. B330837

(Cal.Ct.App. Mar. 5, 2026)). Who owns the water rights—the company or its members--is important for several reasons, including that the rights have monetary value and the owner decides how the water is used or transferred. The Court found that in the case of Del Norte Water Company and Mahan Ranch, LLC, water rights remained with landowners, because there was no clear evidence those rights were transferred to the companies. This case serves as reminder for all mutual water companies to review their articles of incorporations and by laws to make sure water rights ownership is reflected in a way that is currently desired by their members.