Reasonable Use Rule
The third system involving private ownership rights is the liability rule known as the American Rule or Reasonable Use Rule. This rule does not guarantee the landowner a set amount of water, but allows unlimited extraction as long as the result does not unreasonably damage other wells or the aquifer system. Usually this rule gives great weight to historical uses and prevents new uses that interfere with the prior use. The determination of who gets a well and how much water may be pumped is usually made by a court unless the state creates a regulatory agency to perform that function, and the primary issue is the "reasonableness" of the use. The advantage to this system is its flexibility in adjudicating competing uses of an aquifer system. Unfortunately, this same flexibility can lead to excessive litigation because well owners may sue at any time to determine if a competing use is "reasonable", a standard that may change with time. The reasonableness standard is also highly dependent on the location of the suit and who ends up in the jury pool. Marketing water rights does not take place until the system is fully adjudicated; new users generally do not purchase groundwater rights until they are sure they cannot obtain “free” water through litigation.
Many states, especially in the western United States, claim ownership of groundwater and allocate the resource through an appropriative system just as they would any surface right. Typically water rights are appropriated based on each aquifer’s sustainable yield, and once all the rights are granted no further permits will be issued. Some states allow the permits to be marketed and some do not. Where the water is not owned by the state and the tort law proves to be an inadequate means to prevent overproduction, states have created administrative regulatory agencies to allocate groundwater rights between competing landowners. In those cases the administrative law essentially supplants the tort law, making the tort remedy (or lack thereof) irrelevant.
Read more about this topic: United States Groundwater Law
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