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California Drought

What Cuts to California Water Rights Mean, For Now

Image: California's Central Valley Heavily Impacted By Severe Drought

Cattle graze on dead grass in the hills surrounding Lake Success on April 23, in Porterville, California. Over 300 homes in the California central valley city of Porterville are living without running water after their wells dried up due to the severe drought. County officials and charitable organizations are providing drinking water and non-potable water to use to wash dishes and bathe. Donna Johnson has been delivering drinking water to residents since the crisis began last year. Justin Sullivan / Getty Images

California told holders of some of the most senior water rights in the state to stop pumping on Friday. Now citizens and businesses in the Golden State are trying to figure out what that means exactly.

The consensus from water customers is that the order, from California's State Water Resources Control Board, will have little impact for now. Instead, they liken it to a shot across the bow, a warning that more "curtailments" will come as the summer dries up what little water is left. The state with America's biggest economy and most productive farmlands is entering its fourth year of severe drought.

The order may also be good news for attorneys, if some decide to sue the state for violating clients' right to water.

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"Someone's looking for a neutral, independent, third-party arbiter over all of this," said farmer Mark Borba, standing in a garlic field he will probably leave fallow in a few weeks.

Borba's name was not on the list released Friday of senior rights holders going back to 1903 who are now banned from diverting water for their use. But Borba has been relying on pumping groundwater to irrigate his crops in the Central Valley, so he contracted to buy water from others further north. Some of those sellers are on the state's list.

"Because of this newest curtailment, some of the sellers of that water have taken a step back and are reconsidering whether they are going to sell or not," he said.

One reason water is being curtailed now is because the state fears there may not be enough cold water in the massive Lake Shasta for federally-protected winter salmon. Less water means warmer water, and warm water is a serious problem for incubating eggs of winter-run salmon and the state's huge salmon industry.

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Earlier this month, environmental groups filed a lawsuit to keep more water in reservoirs for fish. "Crops can be grown another year," the groups said, "but extinction is forever."

Two names on the list told CNBC that the state's curtailment means nothing. Yet.

"There's no water to take," said Jerry Spencer, who manages Van Vleck Ranching. He said the rights being curtailed were for seasonal creeks that have already run dry.

Also on the list is South Feather Water & Power, which CNBC profiled last month for having the cheapest water in the country. General manager Mike Glaze said the state's order only affects surface water which is being diverted to his facility. "We stopped diverting to storage prior to the order," he said. "Now we draw from storage for all of our consumption purposes."

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The state water board said it's assessing weekly whether to cut even more water, and farmers downstream aren't sure what the summer holds.

"Individual producers won't know the ramifications for a few weeks," said Joel Nelsen of the California Citrus Mutual. "What the state has done is make a deal so that others can make water deals, and then the state changes its mind, which potentially—likely—undoes all the deals."

Mark Borba predicted it'll all end up in court. He's currently farming only 6,900 acres out of his 9,000. Next year, that number could go down to 4,500 acres.

"There's very little trust among the water users," he said. "Urban folks are always suspicious of [agriculture] and [agriculture] suspicious of environmentalists, and it goes round and round. I think there will be some adjudication of water rights."