2014 Legislative Preview: Shareholders' Rights Legislation

The following article was written by Craig Smith, one of my partners at Smith Hartvigsen, PLLC, for the Water & The Law newsletter that our firm publishes on a quarterly basis. If you would like to receive an email version of the newsletter, please click here to join our mailing list.

The very controversial water issue, the rights of shareholders of nonprofit water companies, will be back before the Utah Legislature in 2014. The 2013 legislation sparked a lively debate during the session which ended in a deadlock with the House approving the legislation and Senate not acting as the session ended. In legislative parlance, the 2013 shareholder rights legislation "died on the board." Rep. Kay McIff (R-Richfield) has now prepared a new version of his 2013 shareholder rights legislation and plans or introducing it during the 2014 legislation session.

Historically, nonprofit water companies came into being when individual farmers determined that they needed to band together to construct the water diversion and distribution facilities necessary to irrigate their farms. For decades, this commonality of interest (e.g., common facilities to deliver water for a common use) bound these companies together. After construction, these facilities needed to be operated and maintained. The water rights themselves were put in the name of the company and individual ownership of and right to use the water was represented by shares of stock in the nonprofit mutual water company.

As irrigated fields began to make way for subdivisions, this commonality of interest began to wane. Shareholders who sold their farms to developers sold their water shares as well. Cities began to either require dedication of or purchased shares and then filed change applications to move irrigation water to municipal sources and uses. In 1993, this practice led to the Utah Supreme Court ruling in East Jordan Irrigation Company v Morgan, commonly known as "the East Jordan Case."

The Utah Supreme Court ruled that shareholders of mutual irrigation companies could no longer file change applications based on their shares. The Supreme Court reversed the long standing practice of the State Engineer and held that only the company, as the holder of the water right, could file an application to change the point of diversion, place of use, nature of use or season of use of a water right.

Although the East Jordan Case stated that companies needed to reasonably consider requests from shareholders to file a change application, "reasonable" wasn't defined and some companies began to either refuse to consider change application requests or to impose conditions such as requiring approval of a super majority of all other shareholders.   In 2002, after a two year effort, then Senate President Leonard Blackham (R-Sanpete) obtained passage of what is now found in Utah Code section 73-3-3.5, the first legislation to define shareholder rights in the context of a shareholder initiated change application. While many argue that Section 73-3-3.5 works well, others disagree.

           

Rep. McIff's current legislation seeks to provide additional rights and protections for shareholders. According to Rep. McIff, who is a lawyer and former judge, his legislation has ten objectives:

1.  Retain the historical qualification that "a person entitled to use of water" may file a change application.

2.  Require a shareholder change application be submitted to the water company for its response before filing with the state engineer.

3.  Require a water company response within 60 days so that all the issues are on the table as early as possible.

4.  Eliminate stonewalling by the water company and the necessity of front end litigation by a shareholder just to obtain the right to file the change application.

5.  Maximize the opportunity for dispute resolution, including relying on mediation to resolve or refine the issues before administrative review of litigation.

6.  Allow either the water company or the shareholder to seek advance court resolution of legal issues (e.g., corporate issues) not within the purview of the state engineer.

7.  Foster the state engineer's gate-keeping role and facilitate getting the water issues before the state engineer as soon as practical.

8.  Provide more practical compensation options for water companies when water is removed from a delivery system, and equalize the remedies if either side is unreasonable.

9.  Allow a shareholder to elect whether or not to participate in the sale of water or an underlying water right proposed by the water company.

10.  Continue to allow denovo judicial review of the state engineer's final decision.

Whether or not Rep McIff's legislation or some derivation thereof passes in 2014 is anyone's guess, but with the continued conversion of farms to subdivisions, this issue will not soon fade away.

To read the full text of the proposed legislation (House Bill 49), click here.
Update: First Substitute House Bill 49 has been introduced. To see the differences between the original bill and the first substitute bill, click here.

Public Meeting Concerning a Proposal to Modify the Groundwater Management Plans for Cedar Valley and Northern Utah Valley

The Utah Division of Water Rights has set a public meeting to discuss a proposal to modify the groundwater management plans for Cedar Valley and northern Utah County. The following information is from the public meeting notice:

What: Public Meeting
Who: Cedar Valley and Northern Utah Valley water users
When: January 15, 2014, 4:00 p.m.
Where: Lehi City Council Chambers, 153 North 100 East, Lehi, UT 84043
Purpose: The purpose of the meeting is to present a proposal to modify the groundwater management plans for Cedar Valley and Northern Utah Valley. Personnel from the Division of Water Rights will be available to take all questions and comments provided by the general public and interested parties.

This meeting is a follow-up to the meeting held in May 2013.  If you have water rights in the Cedar Valley area (Area 54) or the Northern Utah Valley / Provo River area (Area 55), you may want to attend the public meeting, as it appears there will be forthcoming changes to the groundwater policies in the area.

For more information about the public meeting, click here.

For current water right policies in the Cedar Valley area, click here.  

For current water right policies in the Northern Utah Valley / Provo River area, click here.

Delta Canal Company v. Frank Vincent Family Ranch -- Amended Opinion

Today the Utah Supreme Court issued an amended opinion in the case of Delta Canal Co. v. Frank Vincent Family Ranch LC. 

The amended opinion only modified paragraph 41 of the original opinion.  As discussed in my blog post about the original opinion, paragraph 41 raised issues and concerns to many in the water community, and appeared to be in conflict with long-standing policies of the Utah Division of Water Rights.  The paragraph below shows the differences between paragraph 41 in the original opinion and paragraph 41 in the amended opinion.  The stricken language is language that the Court removed, and the underlined language is language that the Court added.

"Finally, the number of acres irrigated is not determinative in a forfeiture analysis, though it may be relevant insofar as it indicates the volume of water used or  whether water usage is beneficial.  Farmers may reduce the total acres irrigated to grow a more water-intensive crop, or vice-versa, so long as they beneficially use their full entitlement.  The number of acres irrigated need not match the number listed on a proposed determination or a final decree from a general adjudication.  The central question in any forfeiture proceeding is whether the appropriator used all of its water allowance in a reasonable manner and for a beneficial purpose."

To read the entire amended opinion, click here.

Water Calculation App for Android

A few months ago, Smith Hartvigsen announced the launch of its iPhone app "Water Chart."  Smith Hartvigsen is now pleased to announce that the Water Chart app is also available for Android phones.  The app allows the user to make water measurement conversions, such as:

• Convert gallons per minute (gpm) to cubic feet per second (cfs)
• Convert millions of gallons to acre-feet
• Convert cubic feet per second (cfs) to acre-feet per year 

 The app also converts measurements associated with land, such as:

• Convert feet to miles
• Convert rods to feet
• Convert links to feet
• Convert kilometers to miles
• Convert square feet to acres

The app also contains other useful information about Utah water rights, the public land survey system (section, township, and range), and more.

For more information and to download the Android app, click here.

Delta Canal Company v. Frank Vincent Family Ranch

Last week, the Utah Supreme Court issued its opinion in Delta Canal Co. v. Frank Vincent Family Ranch LC.  In this case, Delta Canal Company, Melville Irrigation Company, Abraham Irrigation Company, Deseret Irrigation Company, and Central Utah Water Co. ("DMADC") brought a lawsuit seeking forfeiture of a portion of a water right owned by Frank Vincent Family Ranch ("Vincent").  DMADC alleged that Vincent and/or Vincent's predecessor had forfeited about 20% of the water right due to nonuse and/or abandonment.

The district court ruled in favor of Vincent, holding that DMADC was precluded from claiming partial abandonment or partial forfeiture.  The district court's ruling was based on its determination that because Vincent had not received his full flow of water each year, Vincent was protected by a statutory exception to forfeiture.  Part of the district court's ruling was that Utah law did not recognize partial forfeiture of a water right prior to 2002.  DMADC appealed the decision to the Utah Supreme Court.

The Utah Supreme Court began its analysis by examining whether partial forfeiture of a water right existed prior to 2002, which was the year when the Utah legislature amended Utah Code 73-1-4 to explicitly provide for partial forfeiture.  The Court noted that the doctrine of partial forfeiture had been enunciated in several prior Utah Supreme Court opinions, starting in 1897.  The Court next concluded that partial forfeiture is inherent in Utah's beneficial use regime, and that the only way to reconcile the forfeiture statue (73-1-4) with the beneficial use statute (73-1-3) is to conclude that partial forfeiture has always existed in Utah law.  The Court also noted that many other courts in the western United States have also concluded that partial forfeiture is inherent in the concept of beneficial use.

The Utah Supreme Court next tackled the issue of forfeiture versus abandonment of a water right.  The Court reiterated its statements from prior cases that abandonment and forfeiture are distinct legal concepts.  Forfeiture is governed by Utah Code 73-1-4.  Abandonment, on the other hand, is a common law principle that requires intent by the water right owner to give up the water right (something not required by the forfeiture statute) and does not have a time requirement (like the seven-year period of nonuse required by the forfeiture statute).

Finally, the Utah Supreme Court addressed some additional issues related to forfeiture.  The Court instructed that a forfeiture analysis should focus on volume (i.e., acre-feet) of water, and not on acres irrigated or on flow (i.e., cubic feet per second or cfs) limitations of a water right.  Perhaps the most interesting paragraph of the opinion is paragraph 41, which states:

"Finally, the number of acres irrigated is not determinative in a forfeiture analysis, though it may be relevant insofar as it indicates whether water usage is beneficial.  Farmers may reduce the total acres irrigated to grow a more water-intensive crop, or vice-versa, so long as they beneficially use their full entitlement.  The number of acres irrigated need not match the number listed on a proposed determination or a final decree from a general adjudication.  The central question in any forfeiture proceeding is whether the appropriator used all of its water allowance in a reasonable manner and for a beneficial purpose."

This paragraph is interesting because it conflicts with the current legal interpretations and policies of the Utah Division of Water Rights.  Accordingly, it will be interesting to see if the Division of Water Rights (who filed an amicus brief in this case), or perhaps even DMADC, will request the Utah Supreme Court to reconsider its opinion.

To read the full opinion, click here.

[UPDATE: The Utah Supreme Court issued an amended opinion to modify paragraph 41.  Click here to read more.]

Town Hall Meetings Regarding Utah Water

Governor Herbert has set up a committee to seek public input on water policies and strategies for the State of Utah.  The committee will travel across the state and hold "town hall meetings" to hear comments and suggestions on planning for future water needs.  The scheduled meetings are as follows:

July 9    Richfield     Sevier County Fairgrounds, Exhibit Hall
July 11   Layton       Layton City Council Chambers
July 16   Price          Price City Hall, Room 207
July 18   Provo         Provo High School, Auditorium
July 25   St. George  Dixie State University, Dunford Auditorium
Aug 6     Vernal          Vernal City Council Chambers
Aug 13   Salt Lake     Department of Natural Resources, Auditorium
Aug 15   Logan          Mount Logan Middle School

All meetings will be held from 7:00 to 9:00 pm.

For more information on the meetings, or to submit a comment without having to attend a meeting, click here.

Tarrant Regional Water District v. Hermann

It is a rare occurrence that the United State Supreme Court hears a case involving water rights.  But when the Court does hear a water case, it is generally a large case involving a dispute between two or more states regarding a shared water source.  Such is the case in Tarrant Regional Water District v. Herrman, which pits the State of Oklahoma against the State of Texas.

The case focuses on the Red River Compact, which was signed in 1978 by Arkansas, Louisiana, Oklahoma, and Texas following more than 20 years of negotiation.  The purpose of the Compact was to equitably apportion the water of the Red River and its tributaries between the states.  The area covered by the Compact was divided into five subdivisions (called "Reaches"), which were further divided into "Subbasins."  This case centered on Subbasin 5 of Reach II. 

Due to the large population growth in north Texas in recent years, public water suppliers in north Texas began searching for new sources of water to meet the growing demand.  Tarrant Regional Water District and other water districts in north Texas tried to purchase water from Oklahoma, but were unsuccessful. Tarrant then filed a permit with the Oklahoma Water Resources Board to take 310,000 acre-feet of water from the Kiamichi River, which is a tributary to the Red River located in Oklahoma. 

Because Tarrant knew that the permit would be denied based on Oklahoma laws prohibiting out-of-state applicants from diverting water in Oklahoma, Tarrant filed a lawsuit to enjoin enforcement of these laws.  Tarrant claimed that the Oklahoma laws were pre-empted by the Compact and violated the federal commerce clause.  The district court ruled in favor of Oklahoma, and that decision was upheld by the Tenth Circuit Court of Appeals.  The case was then sent to the United States Supreme Court.

The section of the Compact at issue gave the states "equal rights to the use of runoff water originating in subbasin 5 [of Reach II] and undesignated water following into subbasin 5," but was silent regarding state boundary limitations. Tarrant asserted that the Compact therefore allowed them to divert water from Subbasin 5 of Reach II, even if the diversion occurred within Oklahoma.  Oklahoma, on the other hand, argued that because the Compact did not explicitly allow diversions by one state in another state, Texas was prohibited from diverting water in Oklahoma. 

Ultimately, the Court sided with Oklahoma, and held that the Compact did not create any cross-border rights and that the water located within Oklahoma's portion of Subbasin 5 remained under the control of Oklahoma and its laws.  The Court also concluded--in very brief and summary analysis--that Oklahoma's laws did not violate the federal commerce clause.

Public Meeting Concerning Groundwater Management Plans for Cedar Valley and Northern Utah Valley

The Utah Division of Water Rights has set a public meeting to discuss a proposal to modify the groundwater management plans for Cedar Valley and northern Utah County. The following information is from the public meeting notice:

What: Public Meeting
Who: Cedar Valley and Northern Utah Valley water users
When: July 9, 2013, 4:00 p.m.
Where: Highland City Council Chambers, 5400 West Civic Center Drive, Highland, UT 84003
Purpose: The purpose of the meeting is to present a proposal to modify the groundwater management plans for Cedar Valley and Northern Utah Valley. Personnel from the Division of Water Rights will be available to take all questions and comments provided by the general public and interested parties.

If you have water rights in the Cedar Valley area (Area 54) or the Northern Utah Valley / Provo River area (Area 55), you may want to attend the public meeting, as it appears there will be forthcoming changes to the groundwater policies in the area.

For more information about the meeting, click here.

For current water right policies in the Cedar Valley area, click here.  

For current water right policies in the Northern Utah Valley / Provo River area, click here.

2012 Utah Groundwater Report

Each year, the United States Geological Survey (USGS) publishes a report on groundwater conditions in Utah. The report is prepared and published in cooperation with the Utah Division of Water Resources, the Utah Division of Water Rights, and the Utah Division of Water Quality. The report is a valuable resource containing information on well construction, groundwater withdrawal, groundwater level changes, groundwater quality, and much more
The 2012 report is available online and can be accessed by clicking here.

Segregation of Water Rights

In Utah, you are permitted to divide your water right into smaller portions through a process called segregation.  Think of segregating water rights like subdividing land--taking one large parcel (water right) and splitting it into two or more smaller parcels (water rights). 

Generally, segregation occurs when a person sells a portion of a water right to another person.  For example, assume A owns a water right for 10 acre-feet.  A sells 5 acre-feet of the water right to B.  Generally, B will then segregate his 5 acre-feet to a new water right number, thereby separating his 5 acre-feet from A's 5 acre-feet.  B can then file a change application or take other action on his water right without needing the permission or signature of A.

To segregate a water right, you need to file a "Request to Segregate a Water Right" form with the Utah Division of Water Rights, along with a $50.00 fee.  You can access the segregation form online by clicking here.

Water Calculation App for iPhone

Smith Hartvigsen is pleased to announce the launch of its new iPhone app, "Water Chart."  The app allows the user to make water measurement conversions, such as:

• Convert gallons per minute (gpm) to cubic feet per second (cfs)
• Convert millions of gallons to acre-feet
• Convert cubic feet per second (cfs) to acre-feet per year 

 The app also converts measurements associated with land, such as:

• Convert feet to miles
• Convert rods to feet
• Convert links to feet
• Convert kilometers to miles
• Convert square feet to acres

The app also contains other useful information about Utah water rights, the public land survey system (section, township, and range), and more.

For more information about the app, click here.

(Update: The Water Chart app is now also available for Android phones.  Click here for more information.)

2013 Utah Legislature Wrap-Up

The following article was published in the Water & The Law newsletter, which our firm publishes on a quarterly basis. If you would like to receive an email version of the newsletter, please click here to join our mailing list.

The 2013 General Session of the Utah Legislature ran from Monday, January 28, 2013 through Thursday, March 14, 2013. The following bills and resolutions passed both the House of Representatives and the Senate, and in most cases are awaiting signature by the Governor.

House Bill 29: Adjudication of Water Rights, Representative Joe Briscoe.
H.B. 29 amends Utah Code sections 73-4-1, -3, -4, -5, -9, -11, and -22. It allows the State Engineer to divide a general adjudication into divisions and subdivisions and conduct the adjudication for each division or subdivision separately. The bill also provides that notices in general adjudications are to be completed by the Division of Water Rights rather than the court clerk, and allows for electronic service of Water Users Claims and the Proposed Determinations in certain instances.

House Bill 36: Storm Water Capture Amendments, Representative Jim Nielson.
H.B. 36 amends Utah Code sections 73-2-25 and 73-3-1.5. The bill would prevent enforcement actions by the State Engineer for detention of water for storm water purposes so long as the detention does not interfere with any water right and does not put the detained water to beneficial use. The bill also proposes changes to the rain water harvesting section to allow capture and use of water from as much as two 100-gallon tanks without registration with the State Engineer, and to allow capture and use of water from a maximum 2500-gallon tank (or multiple tanks totaling no more than 2500 gallons) after registering with the State Engineer. The bill would also clarify that the ability to harvest rainwater consistent with section 1.5 does not constitute a water right and cannot be assigned, consolidated, or be the subject of a change application.

House Bill 72: Safe Drinking Water Disclosure Act, R. Barrus.
H.B. 72 requires certain disclosures related to fluoridation of water supplies. It also requires that fluoridation be temporarily discontinued under certain circumstances and requires Utah Division of Drinking Water oversight of fluoridation record keeping.

House Bill 73: Water Easement Amendments, Representative John G. Mathis.
H.B. 73 amends Utah Code section 57-13a-104 and would establish a procedure for a holder of a prescriptive easement for water conveyance to abandon all or a portion of its easement. The bill contains notice provisions to ensure that others who may have an interest in the canal easement or in keeping the canal corridor active can take appropriate action. The abandonment would be subject to others who may have established a right, but if no others exist, then the owner of the underlying property may reclaim the property.

House Bill 166: Water Rights Amendments, Representative Ken Ivory.
H.B. 166 allows a beneficial user of water for livestock on public lands to access and improve public land that has been designated for grazing to use, develop, and maintain beneficial use of water appurtenant to that designated area. Additionally, if the federal government files a diligence claim, the state engineer is obligated to notify the Natural Resources, Agriculture, and Environment Interim Committee of the claim. Finally, the bill requires the Department of Natural Resources to, before November 30, 2013, study the state's jurisdiction over water right conflicts between state or its subdivisions or citizens and the federal government.

House Bill 326: Division of Water Rights Amendments, Representative R. Curt Webb.
H.B. 326 requires the state engineer to consider a recorded water rights deed addendum as a report of water right conveyance. The bill further provides that if a county recorder updates ownership based on a recorded document, the state engineer shall rely on that document to update title to a water right appurtenant to that land. Finally, the bill also requires that, absent clear language in a company's articles or bylaws, the right to use of water evidenced by shares of stock may only transfer under chapter 8 of the Utah Uniform Commercial Code and not as an appurtenance to land.

House Bill 358: Instream Flow Amendments, Representative Mike Noel.
H.B. 358 gives more flexibility for fishing groups wanting to file for an instream flow water right. Specifically, a change application for instream flow may occur if there is a Candidate Conservation Agreement with Assurances or if there is the fishing group as entered into a contract to indemnify the water right holder against any liability under the Endangered Species Act.

House Bill 360: Water and Irrigation Revisions, Representative Ryan D. Wilcox.
H.B. 360 is a cleanup bill that closes an unintended loophole from a H.B. 51 in 2008. Although H.B. 51 (2008) did provide additional protections against forfeiture, it was not intended to resurrect water rights subject to forfeiture. It arguably allowed a person to do so, however, simply by filing a nonuse application. H.B. 360 clarifies that a nonuse application only prevents the years where the nonuse application is active from being considered in a forfeiture action and does not prevent forfeiture based on nonuse that predated the nonuse application.

House Joint Resolution 14: Joint Resolution on Water Rights, Representative Ken Ivory.
H.J.R. 14 expresses concern with actions by the U.S. Forest Service that seek to take control of water rights originating and used on federal public lands and calls on state, county, and local governments "to protect, preserve, and defend their jurisdiction . . . over the water resources of [Utah]."

Senate Bill 30: Water and Irrigation Amendments, Senator Margaret Dayton.
S.B. 30 makes the following amendments: (a) Amends section 73-1-4 to remove an unintended forfeiture exemption for the sometimes-decades-long period between when the State Engineer issues a proposed determination and when a final decree is issued by the court, to prevent the State Engineer from asserting forfeiture in a proposed determination for periods ending more than fifteen years before the date of the proposed determination, and to prevent a forfeiture challenge by anyone to a water right included in the proposed determination based on pre-proposed determination nonuse unless the challenge comes in the form of a timely objection to the proposed determination. (b) Amends section 73-2-1 to make rulemaking related to sewage effluent reuse discretionary for the State Engineer. (c) Amends section 73-2-22 to update the name of the Emergency Management Administration Council. (d) Amends section 73-3-12 to further define how the State Engineer should assess proof extensions for wholesale electrical cooperatives beyond fifty years. (e) Amends section 73-3-16 to remove the requirement that a submission of proof have both a professional engineer stamp and a notary stamp. (f) And amends section 73-5-13 to require that a diligence claim be prepared by a professional engineer or licensed surveyor rather than require a verification under oath.

Senate Bill 101: Division of Water Rights Revisions, Senator Margaret Dayton.
S.B. 101 makes technical revisions to sections 73-3-10, 73-3-18, 73-3-20, and 73-5-13. The most significant changes are that fixed time applications no longer have a proof due deadline, diligence claimants may file an amended diligence claim, and general adjudications can cut off unfiled diligence claims.

Senate Bill 115: Water Development Commission Amendments, Senator Margaret Dayton.
S.B. 115 provides for staggered, four-year terms for appointed nonvoting members of the Commission.

Senate Bill 276: Water Conservancy District Capital Assets, Senator John Valentine.
S.B. 276 enacts Utah Code section 17B-2a-1010, which requires conservancy districts to "adopt a policy for the assessment, maintenance, and replacement of . . . qualified capital assets" and inventory which of its assets are "qualified capital asset[s]."

Senate Concurrent Resolution 8: Concurrent Resolution for the Provo Reservoir Canal Title Transfer, Senator Margaret Dayton.
S.C.R. 8 calls for transfer of title to the Provo Reservoir Canal from the United States to the Provo River Water Users Association in conformance with the Provo River Project Transfer Act (P.L. 108-382).

The Demise of Senate Bill 109

The following article was written by David Hartvigsen, one of my partners at Smith Hartvigsen, PLLC, for the Water & The Law newsletter that our firm publishes on a quarterly basis. If you would like to receive an email version of the newsletter, please click here to join our mailing list.

The 2013 General Session of the Utah Legislature recently ended. One of the most significant bills this session was SB 109 - Change Application Procedure, sponsored by Sen. Ralph Okerlund and Rep. Lowry Snow. In fact, Rep. Daniel McCay stated on the House Floor that this was probably the most important policy decision before the legislature this year. But despite extensive work and debate over the last several years, the final move was to send it back for more study between now and next session.

You may recall that for the last four years, the State Engineer has requested that the scope of his review of historical beneficial use in acting upon change applications (that is, his "gatekeeper" role "to keep out bad water rights") be clearly defined by statute. In 2011, the Utah Supreme Court issued the Jensen v. Jones opinion that concluded that the State Engineer currently lacks statutory authority to consider nonuse of a water right when ruling on a change application. As a result, the Water Coalition and Executive Water Task Force helped prepare a proposed bill in the 2012 session (SB187) that would give the State Engineer statutory authority to act as a gatekeeper and consider the amount of water that is "available to be changed based on use or nonuse." A second Supreme Court decision, in the case of Salt Lake City v. Big Ditch Irrigation Co. raised another issue with the change application process involving who can file a change application. SB187 also addressed this issue. SB187 did not make it through the full legislative process in 2012 and was reincarnated as SB109 in the 2013 session. Another change application bill was introduced in the 2013 session as HB123 by Rep. Kay McIff. It addressed, among other things, the issue of shareholder rights regarding change applications on water rights held by water companies.

During the course of this year's session, four new versions of SB109 were prepared. The first substitute version added a "swing out provision" for municipalities whereby the municipalities had the option of having the courts or the Property Rights Ombudsman perform the gatekeeper role of determining whether or not there had been any nonuse. It also gave cities a special process to give them finality of this issue of nonuse so that they could move forward knowing exactly how much water was being dedicated for a specific development project. Substitute #2 refined some of the new concepts added in Substitute #1 and then specified that the special swing out provisions for the municipalities terminated in 2016 at the end of a three-year test period. Substitute #3 merged the shareholder rights provisions from HB123 into SB109. Adoption of Substitute #2 was delayed as Substitute #3 was being developed and before it could be officially adopted, an effort was made to insert an extensive procedure for processing shareholder change applications. This effort resulted in Substitute #4 being adopted in place of Substitute #1.

There are three particularly interesting things about the evolution of SB109, starting with last year's SB187 and ending with Substitute #4. The first is that the gatekeeper authority the State Engineer was seeking was significantly limited. He could look at nonuse only when a change application was protested and then, only if all of the parties agreed to allow him to address the nonuse issue. Otherwise, the issue would be addressed by swinging out to the courts or the Ombudsman and then the parties would proceed with the State Engineer for the rest of the change application process. If the change application was not protested, the State Engineer would not be able to act as a gatekeeper and would have to proceed with the change application without looking at nonuse.

The second interesting thing is that initially members of the House of Representatives felt like they were cut out of the policy making process because they were essentially told that the bill had been through extensive development, negotiations, and review by the water community and therefore the bill (SB109 and Substitutes #1 and #2) shouldn't be changed by the House. Ironically, the same water community felt like they had been cut out of the policy making process by the House because they were not going to get to see Substitute #3, and did not get to see Substitute #4, before being presented on the floor of the House for adoption.

The third item is that through this process, a very detailed and complex proposal evolved ... without review by, and input from, the general members of the water community. The process, though cumbersome, appeared to be generally fair. However, substantial opposition was generated because interested people were not given the chance to be involved in the process.

It appears that these three factors, in some combination or another, doomed Substitute #4 in the waning hours of the session. Substitute #4 was adopted and passed the House late in the session and was sent over to the Senate for the Senate to "concur" with the changes made by the House. It was immediately "circled," or placed on hold, by the Senate. Later in the afternoon, it was uncircled and then the Senate, without debate, refused to accept the House changes. That is, the Senate refused to accept Substitute #4 over Substitute #1 which the Senate had previously approved. When there is a stalemate such as this, a "conference committee" with three Senators and three Representatives is appointed to try to work out a mutually agreeable compromise. With the few hours remaining in the session, it appears that this conference committee process was not actively pursued and the bill was left to die as the session ended at midnight. One final interesting point is that there does not seem to be anything in the list of issues to be addressed by the legislature during the interim on water rights, change applications, or shareholder rights. So, we may be left with the current status of no State Engineer authority to review non-use for a while.

Public Meeting Concerning Water Policies in Parowan Valley

The Utah Division of Water Rights has set a public meeting to discuss water right policies for the Parowan Valley area. The following information is from the public meeting notice:

What: Public Meeting
Who: Parowan Valley Water Users
When: April 2, 2013, 3:00 p.m.
Where: Parowan City Council Chambers, 16 South Main Street, Parowan, Utah
Purpose: The Division of Water Rights has commissioned the United States Geologic Survey (USGS) to perform a hydrogeologic study of the Parowan Valley.  The purpose of the meeting is to present the work that the USGS will be doing and to discuss the water right policies in the area.  Personnel from the Division of Water Rights and the USGS will be available to take all questions and comments provided by the general public and interested parties.

If you have water rights in the Parowan Valley area (Area 75), you may want to attend the public meeting, as it appears there may be forthcoming changes to the water right policies in the area.

For more information about the meeting, click here.

For current water right policies in the Parowan Valley area, click here.

2013 Legislature: Division of Water Rights Amendments

Representative Curt Webb has introduced House Bill 326 (H.B. 326), entitled "Division of Water Rights Amendments."  The bill seeks to make several changes to the Utah Water Code. 

First, the bill seeks to amend Utah Code section 73-1-10 by including a provision to clarify that a recorded Water Rights Addendum will act as a Report of Conveyance to update water right ownership information with the Division.  The Division has already been doing this as a matter of policy, but this statutory amendment gives clarification and confirmation of this practice. 

Second, the bills seeks to amend Utah Code section 73-1-11 to allow the Division to update water right ownership information based on deeds and other documents relied on by county recorder offices to update title to land.  This corrects an existing problem that arises when a county recorder's office has updated its tract index based on a recorded deed or document, but the Division has an issue or concern with that same deed or document, thereby making it difficult to update ownership information for water rights appurtenant to the land. 

Third, the bill seeks to amend Utah Code section 73-1-11 to shares in a water corporation (canal company, ditch company, irrigation company, etc.) are not appurtenant to land, and are transferred only under Chapter 8 of the Uniform Commercial Code.  The currently language states that shares "shall not be deemed appurtenant to land," but courts have interpreted this language to mean that there is only a "rebuttable presumption" that shares are not appurtenant, which has caused confusion and dispute about when shares are and are not appurtenant.

To read the full text of the bill, click here.

For an update on this bill, click here.

2013 Legislature: Public Trust Obligations and Constitutional Protections

Representative Kay McIff has introduced House Bill 68 (H.B. 68), entitled "Public Trust Obligations and Constitutional Protections."  This bill seeks to define the scope and limits of the public trust doctrine in Utah. The bill also clarifies that a water right is a property right that is protected by the Utah Constitution, and cannot be taken for public use without just compensation.

This bill may face some oppoition from the angling community (see, for example, this letter to the editor published in the Salt Lake Tribune), so it will be interesting to watch this bill.

To read the full text of the bill, click here.

2013 Legislature: Change Application Procedure

Senator Ralph Okerlund has introduced Senate Bill 109 (S.B. 109), entitled "Change Application Procedure."  This bill is similar to S.B. 187 from 2012, and is intended to make changes in response to the the Salt Lake City v. Big Ditch case and the Jensen v. Jones case.  The bill seeks to better define who is permitted to file a change application.  The other major purpose of the bill is to give the State Engineer statutory authority to act as a "gatekeeper" and consider nonuse in the context of a change application.  Essentially, it allows the State Engineer to limit the approval of a change application to the amount of water that has been beneficially used in the past seven years.

This bill has produced a lot of discussion and proposed amendments.  Accordingly, it is likely that this bill will see several amendments if it is to get passed by both the Senate and the House.

To read the full text of the bill, click here.

For an update on this bill, click here.

2013 Legislature: Division of Water Right Revisions

Senator Margaret Dayton has introduced Senate Bill 101 (S.B. 101), entitled "Division of Water Right Revisions."  This bill makes mostly re-wording and technical changes to several sections of the Utah Water Code.  The bill does make some important changes to the law regarding diligence claims.  For example, the bill would allow a court, as part of the general adjudication process, to issue a decree prohibiting any future diligence claims with an area.  The bill allows provides some clarification on the filing of a corrected diligence claim.

To read the full text of the bill, click here.

For an update on this bill, click here.

2013 Legislature: Water Easement Amendments

Representative John G. Mathis has introduced House Bill 73 (H.B. 73), which is entitled "Water Easement Amendments." The bill seeks to amend Title 57, Chapter 13a of the Utah Code by establishing a procedure a for person who holds a prescriptive easement for a water conveyance (ditch, canal, pipeline, etc.) to abandon all or part of the prescriptive easement.  The bill would require the easement holder to publish, provide, and record notice of the abandonment.  The bill provides that the abandonment does not affect any rights that others may have to the easement.

To read a copy of the bill, as amended, click here.

For an update on this bill, click here.

Public Meeting Concerning the Cedar Valley

The Utah Division of Water Rights has set a public meeting to discuss water right policies for the Cedar Valley area.  The following information is from the public meeting notice:

What: Public Meeting
Who: Cedar Valley Water Users
When: March 7, 2013, 3:00 p.m.
Where: Eagle Mountain City Offices, 1650 E. Stagecoach Run, Eagle Mountain, UT 84005
Purpose: The purpose of the meeting is to present a summary of a hydrogeologic study (Hydrogeology and simulation of groundwater flow in Cedar Valley, Utah County, Utah: Utah Geological Survey Special Study 145) completed by the Utah Geological Survey (UGS) and to discuss the water right policies in the area. Personnel from the Division of Water Rights and the UGS will be available to take all questions and comments provided by the general public and interested parties.

If you have water rights in the Cedar Valley area (Area 54), you may want to attend the public meeting, as it appears there may be forthcoming changes to the water right policies in the area.

For more information about the meeting, click here.

For current water right policies in the Cedar Valley area, click here.