I have written several posts about mutual water companies in California and continue to see a lot of interest in the topic from readers. This post describes a recent court decision regarding the method of allocating water supplies within a mutual water company in Ventura County, in the case of De Boni Corporation v. Del Norte Water Company, 200 Cal.App.4th 1163 (2011).
I have been asked several times in the past few weeks whether California mutual water companies are authorized to transfer water to non-shareholders at a profit. It appears some activists have begun arguing that California Public Utilities Code § 2705 prohibits mutual water companies from making money on water transfers. This challenge is part of a broader opposition to water transfers in the state, based on a public policy concern that some individuals are profiting from selling water, which is a public resource. As I explain below, § 2705 does not prohibit mutual water companies from transferring water to non-shareholders at a profit, and California law generally supports the right of any water rights holder, mutual or otherwise, to sell water for financial remuneration.
I have received many comments and questions on my earlier post about California Mutual Water Company Basics. In order to protect the privacy of questioners, I have responded to most individually rather than on this blog. In the belief that there may be value in providing answers to some of the most frequently asked questions here, this post elaborates on a few issues regarding mutual water companies.
I have noticed that a number of readers find their way to my blog seeking information related to California mutual water companies. In an effort to respond to that apparent demand, this post is devoted to some of the basics of those organizations. There are many nuances and other laws I will not mention in this post; for those you’ll have to contact me, since there are many considerations relevant to mutual water company operations and disputes.