Your description is an easterner’s simplified version of many of these events in the west.
In the west, there is indeed split-estate property. One of the estates split from others is water.
In Nevada, there clear, unequivocal water rights law controlled by the state. Many ranchers, especially in the southern part of the state, have long-held water rights to streams and springs that are on public land. These rights are now quite valuable.
Before the Taylor Grazing Act, the graziers held rights to the springs for watering cattle/sheep and an area of meadow around such springs and creeks for a small distance around them. Those rights are still recorded on the books in Nevada, and the water rights are absolutely recorded by the State Engineer’s office.
There’s a wrinkle tho: In Nevada, you have to “use it or lose it” with regards to most water rights, both surface and drilled. If you don’t use your water rights at least one year out of every five, you run the risk of losing your water rights, which then revert to ownership by the state.
The BLM has been using the tactic of using “grazing conditions” (which most city slickers wouldn’t know one stick of grass from another, yet they want to propound long and loud about grazing issues) to suspend grazing on an area where the BLM would like to apply for the water. The BLM knows that all they need to do is suspend the grazing for six years, then protest to the State Engineer’s office on the lack of beneficial use of the water, then there’s a hearing in Carson and the water is removed from the rancher’s control.
The water is the private property here, and is infinitely more valuable than the grazing rights. The law of beneficial use in Nevada is what is being used against the rancher by the BLM (and USFS) to gain control over the water.
+1. As usual good summary from you.