The seminal issue in developing recycled water is who has rights to the water? A proponent that is seeking to develop such a resource must have the legal rights to use the source as opposed to the water supplier, and, as a corollary, the proponent must also have the legal right to withdraw the recharge water as against downstream water rights holders. This article focuses on the statutory and case law addressing the rights between the publicly owned treatment works ("POTW") producer and discharger of recycled water into a natural watercourse, as against downstream water rights holders. The water rights struggle between these parties will explain the current hurdles a POTW faces in claiming an exclusive right to recycled water in California. Our examination will also broaden to analyze how other states have addressed this issue, and proposes an alternative approach-a POTW's exclusive right to recycled water as a "new source of supply."