Friday, August 4, 2017

Burr v. Koosharem Irrigation Company

The Utah Court of Appeals recently issued its opinion in the case of Burr v. Koosharem Irrigation Company. The case began in 2014 when Greg Torgerson, a shareholder in Koosharem Irrigation Company, filed a lawsuit against the Company. Shortly thereafter, two additional shareholders, Chad Torgerson and Bret Kouns, joined in the lawsuit. The three plaintiffs filed an Amended Complaint, which included a shareholder derivative claim against the Company and two of the Company's directors. The plaintiffs alleged that these two directors had breached their fiduciary duties to the Company, had engaged in self-dealing, and had failed to act in good faith and with loyalty. The plaintiffs also sought to have the two directors removed from the board due to "rigged elections."

Under the Utah Revised Nonprofit Corporation Act, a court action to remove a director must be commenced "by voting members holding at least 10% of the votes entitled to be cast in the election of the director's successor." The three plaintiffs owned a combined 11.9% of the outstanding shares in the Company. In 2015, however, plaintiff Bret Kouns passed away. The two remaining plaintiffs only owned a combined 5.3% of the outstanding shares.

Following an investigation by a court-appointed committee that determined that a derivative claim was not in the best interests of the Company, the court dismissed plaintiffs' derivative claims. The Company then sought to have the director removal claim dismissed as well, citing to the fact that the two remaining plaintiffs did not own the requisite number of shares.

Burr, another shareholder in the Company, then sought to join the lawsuit by filing a motion to intervene. If Burr was allowed to intervene in the lawsuit, the plaintiffs would collectively have sufficient shares to be above the required 10% threshold. The district court, however, denied Burr's motion to intervene, concluding that Burr had failed to adequately explain why he had waited nearly two years to try to join in the lawsuit. Burr appealed the decision to the Court of Appeals.

The Court began its opinion by noting the standard for a party seeking to intervene, which is that the party must demonstrate "(1) that its motion to intervene was timely, (2) that it has an interest relating to the property or transaction which is the subject of the action, (3) that the disposition of the action may as a practical matter impair or impede its ability to protect that interest, and (4) that its interest is not adequately represented by existing parties." The Court determined that Burr had met these requirements. Although Burr's motion to intervene was not filed for almost two years after the case was initiated, his participation in the case did not become necessary until Kouns passed away. Thus, the motion to intervene was timely. Furthermore, Burr had an interest in the subject matter of the case because he was a shareholder in the Company, and without Burr's participation in the case, the director removal claim would be dismissed and the interests of Burr (and the other two plaintiffs) would be affected. Finally, the Court determined that Burr's interests were adequately represented until Kouns' death -- but after Kouns' death, Burr's interests were not adequately represented by the remaining two plaintiffs who did not own sufficient shares to allow the case to continue.

For these reasons, the Court of Appeals held that Burr should have been allowed to intervene in the case. The Court of Appeals therefore reversed the decision of the district court and sent the case back to the district court to continue.

To read the full opinion, click here.

Utah Water Strategy Report

In 2013, Governor Gary Herbert tasked the State Water Strategy Advisory Team to provide recommendations for a 50-year water strategy for the State of Utah. The Advisory traveled around the state and held town hall meetings, and also invited written comments, to get public input on planning for future water needs.

The Advisory Team has recently published its Recommended State Water Strategy, which is a 200-page report to Governor Herbert containing various recommendations and ideas regarding how Utah should manage its water resources into the future. Some of the topics covered include:
  • Water conservation and efficiency
  • Development of water supplies
  • Water for agricultural lands and food production
  • Preservation of natural water systems
  • Water quality
  • Maintenance and replacement of existing water infrastructure
  • Impacts of climate change on water supplies
  • Utah water law and policy
  • Role of policymakers
  • Science, technology, and innovation
To read the full report, click here.

Monday, July 17, 2017

Public Meeting Concerning the General Adjudication in Liberty Park Area

The Utah Division of Water Rights has set a public meeting to discuss the general adjudication of water rights in the Liberty Park area in Salt Lake County East Division of the Utah Lake / Jordan River Drainage (Area 57, Book 5). The Liberty Park area generally includes the area from 300 West on the west and 1100 East on the east, and from 900 South on the north to 2100 South on the south (see map below). The following information is from the public meeting notice:

What: Public Meeting
Who: Water Users within the Liberty Park area
When: August 2, 2017, 6:00 to 7:00 pm
Where: Department of Natural Resources, Room 1050, 1594 W. North Temple, Salt Lake City
Purpose: In accordance with Chapter 73-4, Utah Code Annotated, and the Third Judicial District Court (Civil No. 360057298), the State Engineer is authorized and ordered to conduct a general determination of the rights to the use of all water, both surface and underground, within the drainage area of the Liberty Park Subdivision, Salt Lake County East Division, of the Utah Lake and Jordan River drainage in Salt Lake County. Efforts are currently underway and over the next few months, representatives of the Division of Water Rights will be working in the Liberty Park area to survey existing water rights and investigate water user's claims. In light of this work, the public is invited to a public meeting. Representatives from the Division of Water Rights will be available during this time to discuss the adjudication process, review water rights within the area, and answer questions. If individuals cannot attend, but have questions regarding the adjudication process or water rights within the Liberty Park area, please contact Josh Zimmerman at (801)538-7240.
Agenda:
1.  Introduction (Blake Bingham, P.E. - Adjudication Program Manager)
2.  Adjudication Process Presentation
3.  Public Comments and Questions

For more information about the meeting, click here.

Friday, June 23, 2017

Training on Water Right Conveyances

The Division of Water Rights will be hosting a training session on ownership and conveyance of water rights. The training will be held on Wednesday, August 30, 2017 at the Department of Natural Resources Building in Salt Lake City (1594 West North Temple) in Room 1040 from 9:00 am to 12:00 pm. Please RSVP to Chris York at cyork@utah.gov if you would like to attend or for further information.

Wednesday, April 26, 2017

Public Meeting Concerning the General Adjudication in Dry Creek Area

The Utah Division of Water Rights has set a public meeting to discuss the general adjudication of water rights in the Dry Creek area in Salt Lake County East Division of the Utah Lake / Jordan River Drainage (Area 57, Book 5). The Dry Creek area generally includes the Dry Creek drainage in the mountains east of Salt Lake City and a portion of Salt Lake City from 700 East on the west to Mario Capecchi Drive on the east, and from Yale Avenue on the south to the City Creek drainage on the north (see map below). The following information is from the public meeting notice:

What: Public Meeting
Who: Water Users within the Dry Creek area
When: May 16, 2017, 6:00 to 7:00 pm
Where: Department of Natural Resources, Room 1050, 1594 W. North Temple, Salt Lake City
Purpose: In accordance with Chapter 73-4, Utah Code Annotated, and the Third Judicial District Court (Civil No. 360057298), the State Engineer is authorized and ordered to conduct a general determination of the rights to the use of all water, both surface and underground, within the drainage area of the Dry Creek Subdivision, Salt Lake County East Division, of the Utah Lake and Jordan River drainage in Salt Lake County. Efforts are currently underway and over the next few months, representatives of the Division of Water Rights will be working in the Dry Creek area to survey existing water rights and investigate water user's claims. Representatives from the Division of Water Rights will be available during this time to discuss the adjudication process, review water rights within the area, and answer questions. If individuals cannot attend, but have questions regarding the adjudication process or water rights within the Dry Creek area, please contact Blake Bingham at (801)538-7345. The meeting will also be viewable online at the following YouTube link.
Agenda:
1.  Introduction (Blake Bingham, P.E. - Adjudication Program Manager)
2.  Adjudication Process Presentation
3.  Public Comments and Questions

For more information about the meeting, click here.


Thursday, April 13, 2017

Water "Hall of Fame or Shame"

The Utah Division of Water Resources is rolling out a new program called "Hall of Fame or Shame." The program allows members of the public to notify the Division of people who are doing a good job of conserving water ("Fame"), as well as people who are wasting or otherwise improperly using water ("Shame"). After an online report is filed, the Division will forward the information on to the appropriate city or public water supplier so that recognition or correction (as the case may be) may be given. To file a report online, click here.

Wednesday, March 29, 2017

Agua Caliente Band of Cahuilla Indians v. Coachella Valley Water District

The Ninth Circuit Court of Appeals recently issued its decision in the case of Agua Caliente Band of Cahuilla Indians v. Coachella Valley Water District. The case started when the Tribe filed a court action seeking a declaration that it has a federally reserved water right to groundwater underlying the Tribe's reservation. The federal government intervened in the case and also asserted that the Tribe had a reserved right to groundwater. The case was divided into three phases, with the first phase being to determine if the Tribe has a reserved right to groundwater. In the first phase, the federal district court ruled in the Tribe's favor, and the ruling was appealed to the Ninth Circuit.

The Ninth Circuit acknowledged that under the Winters doctrine, federal reserved water rights are directly applicable to Indian reservations, but recognized that prior applications of the Winters doctrine had been only for surface water and that no court had squarely addressed the question of whether the doctrine extended to groundwater. The Court looked at the primary purposes of the reservation and extended the Winters doctrine to include groundwater. The Court noted that some reservations lack perennial streams and therefore depend on pumping groundwater for present and future survival sustainability.
 
To read the full decision, click here.

Sunday, March 19, 2017

Haik v. Salt Lake City Corporation

The Utah Supreme Court recently issued its opinion in the case of Haik v. Salt Lake City Corporation. The case started nearly 20 years ago when Mark Haik filed a lawsuit in federal court against Salt Lake City. Mr. Haik asserted that Salt Lake City was required to supply water to his undeveloped property in the Albion Basin Subdivision. Mr. Haik's complaint against Salt Lake City included claims for unlawful taking and violation of equal protection. The federal court ruled against Mr. Haik, and concluded that Salt Lake City had no duty to provide water to Mr. Haik's property.

In 2012, Mr. Haik filed a second lawsuit in federal court against Salt Lake City, again seeking for the court to order Salt Lake City to provide water to his property. This lawsuit alleged different legal claims (including claims of civil conspiracy and fraud on the court), but was based on the same underlying facts as the first lawsuit. The federal court again ruled against Mr. Haik and determined that he had no claim against the City.

In 2014, Salt Lake City filed a lawsuit in state district court seeking an administrative review of State Engineer orders approving change applications related to the Albion Basin area. As part of the lawsuit, Salt Lake City also brought claims to adjudicate and quiet title to water rights in Little Cottonwood Creek, including water claimed by Mr. Haik. In response, Mr. Haik brought counterclaims against Salt Lake City that were nearly identical to the claims brought in his 2012 federal lawsuit. The district court dismissed Mr. Haik's counterclaims on the grounds that they were barred by res judicata, which is a legal principle that prohibits a party from bringing the same claims multiple times. The district court's decision was appealed to the Utah Supreme Court.

The Utah Supreme Court reviewed the principles of res judicata to determine if the district court had correctly dismissed Mr. Haik's counterclaims against Salt Lake City. The Supreme Court noted that this was not the second time, but the third time, that Mr. Haik had brought his claims against Salt Lake City. The Supreme Court noted that although some of Mr. Haik's counterclaims differed slightly from the claims he asserted in federal court, they were claims that could have been--and should have been--asserted in his federal court actions, and were therefore barred under res judicata. Mr. Haik asserted that his claims were not barred because he was bringing them as counterclaims in the state court action, rather than as direct claims as he did in his federal court actions, and that his counterclaims were necessary to mount a proper defense. The Supreme Court did not find his distinction to be persuasive (although the Supreme Court did note that a future decision may be necessary to determine if Mr. Haik will be prohibited from raising certain defenses in the state court action due to his prior federal court actions).

In the end, the Supreme Court affirmed the district court's dismissal of Mr. Haik's counterclaims. The Supreme Court summarized its decision as follows: "'What has been will be again, and what has been done will be done again; there is nothing new under the sun.' Ecclesiastes 1:9. Certainly not Mr. Haik's lawsuit."

To read the full opinion, click here.

Tuesday, March 14, 2017

2017 Legislative Review of Water-Related Bills

The 2017 General Session of the Utah Legislature ended on Thursday, March 9. The last day for the Governor to sign or veto bills is March 29. Here are the highlights of the water-related bills that passed and didn't pass during the session:
 
BILLS THAT PASSED
 
HB 84 - Water Law - Nonuse Requirements
Rep. Tim Hawkes
House Bill 84, which was recommended by the Executive Water Rights Task Force, clarifies that: (1) an approved nonuse application excuses the requirement of beneficial use from the nonuse application's filing date; (2) the filing or approval of a nonuse application, or a series of nonuse applications, does not constitute beneficial use or protect a water right that is already subject to forfeiture; and (3) a nonuse application does not bar a water right owner from using the water as permitted under the water right or from claiming any available defense against forfeiture. The bill also modifies the procedures for instituting a forfeiture action for nonuse.
 
HB 118 - Authority of State Engineer
Rep. Tim Hawkes
House Bill 118, which was recommended by the Executive Water Rights Task Force, allows the State Engineer to develop rules regarding the "duty of water" or in other words, a quantification of the maximum amount of water that can be beneficially used, without waste, for a particular purpose. Although the State Engineer and the courts in General Adjudications have used this concept for over 100 years, there is no statutory authority for this concept. This bill gives the State Engineer express authority to do what is already being done with respect to the duty of water.

HB 180 (2nd Sub.) – Water Right Transfer Amendments
Rep. Logan Wilde
House Bill 180 modifies Utah Code section 73-3-18 regarding assignment of an unperfected application to appropriate. If an assignment is made using the Division of Water Rights’ assignment form, and it is recorded and forwarded to the Division, the assignment will be treated as a report ofconveyance for updating title on the Division’s database.

HB 181 – State Engineer Fee Application Amendments
Rep. Logan Wilde
House Bill 181, which was recommended by the Executive Water Rights Task Force, updates the name of an "extension of time in which to resume use application" to its current name used elsewhere in the code, i.e., a "nonuse application."

HB 301 (1st Sub.) – Canal Safety Amendments
Rep. Scott D. Sandall
House Bill 301 removes a requirement that a canal owner receive notice from a municipality or county of any proposed subdivision located within 100 feet of the canal. The bill adds a more defined requirement that a municipality or county not approve or reject a subdivision that is located within 100 feet of canal until after the municipality has provided at least 20 days’ notice of the subdivision to the canal owner so that the canal owner can provide input regarding access to the canal, maintenance of the canal, canal protection, and canal safety. The bill also makes minor changes to the requirement that canal owners provide contact information and canal location information to each municipality and county in which its canal is located.

SB 11 (2nd Sub.) - Water Development Commission Amendments
Sen. Margaret Dayton
Senate Bill 11 renames the State Water Development Commission to the Legislative Water Development Commission and modifies the membership of the Commission. The bill removes all of the non-legislative, non-voting members from the Commission: the state treasurer; two representatives of the Governor's Office, including one representative from the Governor's Office of Management and Budget; nine representatives of different river districts; the executive director of the Department of Natural Resources; the executive director of the Department of Environmental Quality; the commissioner of agriculture and food; a member of the Board of Water Resources; a representative of an organized environmental group; a representative of agricultural production; and a representative with experience with finance and economics. The bill adds that non-voting members can be appointed to two-year terms by the Legislative Management Committee upon recommendation of the Commission co-chairs.

SB 45 – Retail Water Line Disclosure Amendments
Sen. Karen Mayne
Senate Bill 45 affects public entities that provide culinary water service to customers. The bill requires that twice per calendar year, these public retail water providers must provide a disclosure to its customers that states whether the property owner or the provider is responsible for repairs to the water line that serves the customer. The purpose of this requirement is to give better clarification of where the provider's responsibility for water line maintenance ends and where the property owner's responsibility for water line maintenance begins. The bill modifies Utah Code section 11-8-4, which was enacted in 2016 and requires the same disclosure for sewer service providers relative to sewer line maintenance responsibilities.

SB 63 (1st Sub.) - Nonprofit Corporation Amendments – Water Companies
Sen. Margaret Dayton
Senate Bill 63 modifies the Utah Revised Nonprofit Corporation Act to change the default rule on the transferability of shares in a water company from non-transferrable to transferrable, unless the articles or bylaws of the water company specify otherwise. The bill further specifies that any restrictions on the transfer of shares in a water company must be reasonable, adopted in good faith and for a legitimate purpose, adopted in the best interests of the water company and its shareholders, and not discriminate against any individual shareholder or class of shareholders. The bill also clarifies that a shareholder in a water company has “an equitable, beneficial interest in the use of the water supply of the water company, proportionate to the shareholder’s shares in the water company, which is an interest in real property” and has a right to receive his/her proportionate share of the company’s water. The bill also expressly allows a water company to purchase delinquent shares of stock and clarifies the process for distributions to shareholders in a water company.
 
SB 214 (1st Sub.) - Public Water Supplier Amendments
Sen. Jani Iwamoto
Senate Bill 214 originally proposed to modify Utah's instream flow statute (Section 73-3-30) to allow public water suppliers to change perfected water rights for instream use. The substituted bill acknowledged that the instream flow issue is very complex and that additional work and input from a number of stakeholders is necessary before any changes are made to the instream flow statute. The bill encourages the Water Development Commission and the Executive Water Task Force to study possible options for expanding the list of those who can file for instream flow rights.
 
SJR 11 - Joint Resolution Regarding the Central Utah Project
Sen. Curtis S. Bramble
Senate Joint Resolution 11 urges the United States Congress and the new administration to budget sufficient funds to enable the Bonneville Unit of the Central Utah Project to be completed.
 
BILLS THAT DID NOT PASS
 
HB 225 – Water Commissioner Amendments
Rep. Scott Chew
House Bill 225 exempts the State Engineer from the Utah Procurement Code with respect to the Water Commissioner Fund, but requires the State Engineer to make administrative rules governing the use of the Fund. The bill also clarifies and expands the items that can be paid from the Fund, including benefits for commissioners, expenses approved by a distribution system committee, and administration expenses of a distribution system committee.

HB 304 (1st Sub.) – Water Conservation Amendments
Rep. Gage Froerer
House Bill 304 modifies water conservation plan requirements, including requiring each water conservancy district and each retail water provider to have a water conservation plan that includes goals for reduction in residential, commercial, and industrial uses, and water conservation measures for these same uses, and including landscaping. The bill also changes some recommended components of a water conservation plan into required components, such as information regarding the installation of water efficient fixtures and appliances; retail water rate structures designed to encourage conservation; and existing or proposed regulations designed to encourage conservation, including restrictions on grass landscaping.

HB 444 – Water Appropriation Modifications
Rep. Merrill F. Nelson
House Bill 444 clarifies which State divisions, departments, and entities can file applications to appropriate water. The bill adds language that these State entities must go through the same appropriation process as a private property owner would have to go through, and that the State entities have no special rights by virtue of being a public entity or public water supplier.
 
SB 228 (1st Sub.) - Water Infrastructure Revisions
Sen. J. Stuart Adams
Senate Bill 228  seeks to modify rules about loans from the Board of Water Resources, including a requirement that the Board establish a plan to require loan applicants to submit their project plans for an independent value engineering review to examine ways that the project’s value can be increased through reducing costs and improving function.
 
SB 271 - Canal and Ditch Modifications
Sen. David P. Hinkins
Senate Bill 271 seeks to allow a property owner whose land is crossed by a canal, ditch, drain, or “buried irrigation conduit” to change the location of the canal, ditch, drain, or “buried irrigation conduit,” subject to several requirements and limitations. The property owner must provide written notice to the water owner, including detailed plans and specifications prepared by a licenses engineer. The property owner must provide contact information for two other engineers to independently review the plans and specifications, and must pay for the cost of this independent review if the water owner elects to use one of the two engineers suggested by the property owner. Alternatively, the water owner can select its own independent engineer, but is responsible for paying the costs incurred for this independent review. The property owner and water owner must negotiate terms regarding any restrictions or impediments to the flow of water through the water channel. This bill would not allow for culinary water lines or secondary water lines to be moved.
 
 

Friday, February 24, 2017

Klamath Irrigation v. United States

The United States Court of Federal Claims recently issued its decision in the case of Klamath Irrigation v. United States. The case dealt with a taking of water rights by the federal government.

The case started when a group of landowners, irrigation districts, and private corporations in California and Oregon alleged that the United States Bureau of Reclamation had effected a taking of their water rights in 2001. The plaintiffs were all water users in the Klamath River Basin. The Klamath Project is managed and operated by the United States Bureau of Reclamation, and is subject to the requirements of the Endangered Species Act. In early 2001, the Bureau determined that the year would be a critically dry year due to drought, and that three species of fish (Lost River sucker, shortnose sucker, and SONCC coho salmon) would likely be affected. As a result, the Bureau terminated delivery of Klamath Project water. The plaintiffs claimed that the Bureau's action of terminating the delivery of water from the Klamath Project constituted a taking of their water without just compensation in violation of the Fifth Amendment to the U.S. Constitution.

The primary issue in the case was whether the plaintiffs' taking claims should be analyzed as regulatory takings or as physical takings. The distinction is important because physical takings are per se takings that require the government to compensate the owner without any further inquiry, but regulatory takings are analyzed and compensated differently. The Court looked to prior cases and precedent to answer the question. In the end, the Court determined that the federal government's action in this case should be analyzed as physical takings rather than as regulatory takings.

To read the full court opinion, click here.