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.
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