This document includes Senate 2nd Reading Floor Amendments incorporated into the bill on Thu, Mar 12, 2015 at 9:57 PM by bhansen.
Senator Jerry W. Stevenson proposes the following substitute bill:


1     
WATER RIGHTS - CHANGE APPLICATION AMENDMENTS

2     
2015 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Kay L. McIff

5     
Senate Sponsor: Jerry W. Stevenson

6     

7     LONG TITLE
8     General Description:
9          This bill modifies Title 73, Water and Irrigation, by amending the requirements for a
10     change application.
11     Highlighted Provisions:
12          This bill:
13          ▸     amends definitions;
14          ▸     modifies the procedure for filing a change application;
15          ▸     provides an option for court resolution of legal issues not within the purview of the
16     state engineer;
17          ▸     allows recovery of attorney fees under certain circumstances; and
18          ▸     makes technical changes.
19     Money Appropriated in this Bill:
20          None
21     Other Special Clauses:
22          This bill provides a coordination clause to reconcile conflicts between this bill and
23     other legislation.
24     Utah Code Sections Affected:
25     AMENDS:
26          73-1-4, as last amended by Laws of Utah 2013, Chapters 221 and 380
27          73-2-27, as enacted by Laws of Utah 2005, Chapter 215
28          73-3-3, as last amended by Laws of Utah 2012, Chapter 229
29          73-3-3.5, as last amended by Laws of Utah 2008, Chapter 3
30     Utah Code Sections Affected by Coordination Clause:
31          73-3-3, as last amended by Laws of Utah 2012, Chapter 229
32          73-3-8, as last amended by Laws of Utah 2007, Chapter 136
33     

34     Be it enacted by the Legislature of the state of Utah:
35          Section 1. Section 73-1-4 is amended to read:
36          73-1-4. Reversion to the public by abandonment or forfeiture for nonuse within
37     seven years -- Nonuse application.
38          (1) As used in this section:
39          (a) "Public entity" means:
40          (i) the United States;
41          (ii) an agency of the United States;
42          (iii) the state;
43          (iv) a state agency;
44          (v) a political subdivision of the state; or
45          (vi) an agency of a political subdivision of the state.
46          (b) "Public water supplier" means an entity that:
47          (i) supplies water, directly or indirectly, to the public for municipal, domestic, or
48     industrial use; and
49          (ii) is:
50          (A) a public entity;
51          (B) a water corporation, as defined in Section 54-2-1, that is regulated by the Public
52     Service Commission;
53          (C) a community water system:
54          (I) that:
55          (Aa) supplies water to at least 100 service connections used by year-round residents; or
56          (Bb) regularly serves at least 200 year-round residents; and
57          (II) whose voting members:
58          (Aa) own a share in the community water system;
59          (Bb) receive water from the community water system in proportion to the member's
60     share in the community water system; and
61          (Cc) pay the rate set by the community water system based on the water the member
62     receives; or
63          (D) a water users association:
64          (I) in which one or more public entities own at least 70% of the outstanding shares; and
65          (II) that is a local sponsor of a water project constructed by the United States Bureau of
66     Reclamation.
67          (c) "Shareholder" [is as] means the same as that term is defined in Section 73-3-3.5.
68          (d) "Water company" [is as] means the same as that term is defined in Section
69     73-3-3.5.
70          (e) "Water supply entity" means an entity that supplies water as a utility service or for
71     irrigation purposes and is also:
72          (i) a municipality, water conservancy district, metropolitan water district, irrigation
73     district, or other public agency;
74          (ii) a water company regulated by the Public Service Commission; or
75          (iii) any other owner of a community water system.
76          (2) (a) Except as provided in Subsection (2)(b) or (e), when an appropriator or the
77     appropriator's successor in interest abandons or ceases to use all or a portion of a water right for
78     a period of seven years, the water right or the unused portion of that water right is subject to
79     forfeiture in accordance with Subsection (2)(c).
80          (b) (i) An appropriator or the appropriator's successor in interest may file an
81     application for nonuse with the state engineer.
82          (ii) If a person described in Subsection (2)(b)(i) files and receives approval on a nonuse
83     application, nonuse of the water right subject to the application is not counted toward a
84     seven-year period described in Subsection (2)(a) during the period of time beginning on the day
85     on which the person files the application and ending on the day on which the application
86     expires without being renewed.
87          (iii) If a person described in Subsection (2)(b)(i) files and receives approval on
88     successive, overlapping nonuse applications, nonuse of the water right subject to the
89     applications is not counted toward a seven-year period described in Subsection (2)(a) during
90     the period of time beginning on the day on which the person files the first application and
91     ending on the day on which the last application expires without being renewed.
92          (iv) Approval of a nonuse application does not protect a water right that is already
93     subject to forfeiture under Subsection (2)(a) for full or partial nonuse of the water right.
94          (v) A nonuse application may be filed on all or a portion of the water right, including
95     water rights held by a water company.
96          (vi) After giving written notice to the water company, a shareholder may file a nonuse
97     application with the state engineer on the water represented by the stock.
98          (c) (i) Except as provided in Subsection (2)(c)(ii), a water right or a portion of the water
99     right may not be forfeited unless a judicial action to declare the right forfeited is commenced
100     within 15 years from the end of the latest period of nonuse of at least seven years.
101          (ii) (A) The state engineer, in a proposed determination of rights prepared in
102     accordance with Section 73-4-11, may not assert that a water right was forfeited unless a period
103     of nonuse of seven years ends or occurs during the 15 years immediately preceding the day on
104     which the state engineer files the proposed determination of rights with the court.
105          (B) After the day on which a proposed determination of rights is filed with the court a
106     person may not assert that a water right subject to that determination was forfeited during the
107     15-year period described in Subsection (2)(c)(ii)(A), unless the state engineer asserts forfeiture
108     in the proposed determination, or a person makes, in accordance with Section 73-4-11, an
109     objection to the proposed determination that asserts forfeiture.
110          (iii) A water right, found to be valid in a decree entered in an action for general
111     determination of rights under Chapter 4, Determination of Water Rights, is subject to a claim
112     of forfeiture based on a seven-year period of nonuse that begins after the day on which the state
113     engineer filed the related proposed determination of rights with the court, unless the decree
114     provides otherwise.
115          (iv) If in a judicial action a court declares a water right forfeited, on the date on which
116     the water right is forfeited:
117          (A) the right to use the water reverts to the public; and
118          (B) the water made available by the forfeiture:
119          (I) first, satisfies other water rights in the hydrologic system in order of priority date;
120     and
121          (II) second, may be appropriated as provided in this title.
122          (d) [This] Except as provided in Subsection (2)(e), this section applies whether the
123     unused or abandoned water or a portion of the water is:
124          (i) permitted to run to waste; or
125          (ii) used by others without right with the knowledge of the water right holder.
126          (e) This section does not apply to:
127          (i) the use of water according to a lease or other agreement with the appropriator or the
128     appropriator's successor in interest;
129          (ii) a water right if its place of use is contracted under an approved state agreement or
130     federal conservation fallowing program;
131          (iii) those periods of time when a surface water or groundwater source fails to yield
132     sufficient water to satisfy the water right;
133          (iv) a water right when water is unavailable because of the water right's priority date;
134          (v) a water right to store water in a surface reservoir or an aquifer, in accordance with
135     Title 73, Chapter 3b, Groundwater Recharge and Recovery Act, if:
136          (A) the water is stored for present or future use; or
137          (B) storage is limited by a safety, regulatory, or engineering restraint that the
138     appropriator or the appropriator's successor in interest cannot reasonably correct;
139          (vi) a water right if a water user has beneficially used substantially all of the water right
140     within a seven-year period, provided that this exemption does not apply to the adjudication of a
141     water right in a general determination of water rights under Chapter 4, Determination of Water
142     Rights;
143          (vii) except as provided by Subsection (2)(g), a water right:
144          (A) (I) owned by a public water supplier;
145          (II) represented by a public water supplier's ownership interest in a water company; or
146          (III) to which a public water supplier owns the right of use; and
147          (B) conserved or held for the reasonable future water requirement of the public, which
148     is determined according to Subsection (2)(f);
149          (viii) a supplemental water right during a period of time when another water right
150     available to the appropriator or the appropriator's successor in interest provides sufficient water
151     so as to not require use of the supplemental water right; or
152          (ix) a water right subject to an approved change application where the applicant is
153     diligently pursuing certification.
154          (f) (i) The reasonable future water requirement of the public is the amount of water
155     needed in the next 40 years by:
156          (A) the persons within the public water supplier's [projected] reasonably anticipated
157     service area based on [projected] reasonably anticipated population growth; or
158          (B) other water use demand.
159          (ii) For purposes of Subsection (2)(f)(i), a community water system's [projected]
160     reasonably anticipated service area:
161          (A) is the area served by the community water system's distribution facilities; and
162          (B) expands as the community water system expands the distribution facilities in
163     accordance with Title 19, Chapter 4, Safe Drinking Water Act.
164          (g) For a water right acquired by a public water supplier on or after May 5, 2008,
165     Subsection (2)(e)(vii) applies if:
166          (i) the public water supplier submits a change application under Section 73-3-3; and
167          (ii) the state engineer approves the change application.
168          (3) (a) The state engineer shall furnish a nonuse application form requiring the
169     following information:
170          (i) the name and address of the applicant;
171          (ii) a description of the water right or a portion of the water right, including the point of
172     diversion, place of use, and priority;
173          (iii) the quantity of water;
174          (iv) the period of use;
175          (v) the extension of time applied for;
176          (vi) a statement of the reason for the nonuse of the water; and
177          (vii) any other information that the state engineer requires.
178          (b) (i) Upon receipt of the application, the state engineer shall publish a notice of the
179     application once a week for two successive weeks:
180          (A) in a newspaper of general circulation in the county in which the source of the water
181     supply is located and where the water is to be used; and
182          (B) as required in Section 45-1-101.
183          (ii) The notice shall:
184          (A) state that an application has been made; and
185          (B) specify where the interested party may obtain additional information relating to the
186     application.
187          (c) Any interested person may file a written protest with the state engineer against the
188     granting of the application:
189          (i) within 20 days after the notice is published, if the adjudicative proceeding is
190     informal; and
191          (ii) within 30 days after the notice is published, if the adjudicative proceeding is
192     formal.
193          (d) In any proceedings to determine whether the nonuse application should be
194     approved or rejected, the state engineer shall follow the procedures and requirements of Title
195     63G, Chapter 4, Administrative Procedures Act.
196          (e) After further investigation, the state engineer may approve or reject the application.
197          (4) (a) The state engineer shall grant a nonuse application on all or a portion of a water
198     right for a period of time not exceeding seven years if the applicant shows a reasonable cause
199     for nonuse.
200          (b) A reasonable cause for nonuse includes:
201          (i) a demonstrable financial hardship or economic depression;
202          (ii) physical causes or changes that render use beyond the reasonable control of the
203     water right owner so long as the water right owner acts with reasonable diligence to resume or
204     restore the use;
205          [(ii)] (iii) the initiation of water conservation or efficiency practices, or the operation of
206     a groundwater recharge recovery program approved by the state engineer;
207          [(iii)] (iv) operation of legal proceedings;
208          [(iv)] (v) the holding of a water right or stock in a mutual water company without use
209     by any water supply entity to meet the reasonable future requirements of the public;
210          [(v)] (vi) situations where, in the opinion of the state engineer, the nonuse would assist
211     in implementing an existing, approved water management plan; or
212          [(vi)] (vii) the loss of capacity caused by deterioration of the water supply or delivery
213     equipment if the applicant submits, with the application, a specific plan to resume full use of
214     the water right by replacing, restoring, or improving the equipment.
215          (5) (a) Sixty days before the expiration of a nonuse application, the state engineer shall
216     notify the applicant by mail or by any form of electronic communication through which receipt
217     is verifiable, of the date when the nonuse application will expire.
218          (b) An applicant may file a subsequent nonuse application in accordance with this
219     section.
220          Section 2. Section 73-2-27 is amended to read:
221          73-2-27. Criminal penalties.
222          (1) This section applies to offenses committed under:
223          (a) Section 73-1-14;
224          (b) Section 73-1-15;
225          (c) Section 73-2-20;
226          (d) [Subsection] Section 73-3-3[(9)];
227          (e) Section 73-3-26;
228          (f) Section 73-3-29;
229          (g) Section 73-5-9;
230          (h) Section 76-10-201;
231          (i) Section 76-10-202; and
232          (j) Section 76-10-203.
233          (2) Under circumstances not amounting to an offense with a greater penalty under
234     Subsection 76-6-106(2)(b)(ii) or Section 76-6-404, violation of a provision listed in Subsection
235     (1) is punishable:
236          (a) as a felony of the third degree if:
237          (i) the value of the water diverted or property damaged or taken is $2,500 or greater;
238     and
239          (ii) the person violating the provision has previously been convicted of violating the
240     same provision;
241          (b) as a class A misdemeanor if:
242          (i) the value of the water diverted or property damaged or taken is $2,500 or greater; or
243          (ii) the person violating the provision has previously been convicted of violating the
244     same provision; or
245          (c) as a class B misdemeanor if Subsection (2)(a) or (b) does not apply.
246          Section 3. Section 73-3-3 is amended to read:
247          73-3-3. Permanent or temporary changes in point of diversion, place of use, or
248     purpose of use.
249          (1) For purposes of this section:
250          (a) "Permanent change" means a change for an indefinite period of time with an intent
251     to relinquish the original point of diversion, place of use, or purpose of use.
252          (b) "Temporary change" means a change for a fixed period of time not, exceeding one
253     year.
254          (2) (a) Subject to Subsection (2)(c), a person entitled to the use of water may make
255     permanent or temporary changes in the:
256          (i) point of diversion;
257          (ii) place of use; [or]
258          [(iii) purpose of use for which the water was originally appropriated.]
259          (iii) period of use;
260          (iv) nature of use; or
261          (v) storage.
262          (b) Except as provided by Section 73-3-30, a change may not be made if it impairs a
263     vested water right without just compensation.
264          (c) A change application on a federal reclamation project water right shall be signed
265     by:
266          (i) the local water users organization that is contractually responsible for:
267          (A) the operation and maintenance of the project; or
268          (B) the repayment of project costs; and
269          (ii) the record owner of the water right.
270          (3) A person entitled to use water shall change a point of diversion, place of use, or
271     [purpose] nature of water use, including water involved in a general adjudication or other suit,
272     in the manner provided in this section.
273          (4) (a) A person entitled to use water may not make a change unless the state engineer
274     approves the change application.
275          (b) A shareholder in a water company who seeks to make a permanent or temporary
276     change to a water right to which the water company is the record owner shall file a change
277     application in accordance with Section 73-3-3.5.
278          [(b)] (5) A person entitled to use water shall submit a change application, upon forms
279     furnished by the state engineer [and shall set forth], that includes:
280          [(i)] (a) the change applicant's name;
281          [(ii)] (b) the water right description, including the water right number;
282          [(iii)] (c) the water quantity;
283          [(iv)] (d) the stream or water source;
284          [(v)] (e) if applicable, the point on the stream or water source where the water is
285     diverted;
286          [(vi)] (f) if applicable, the point to which it is proposed to change the diversion of the
287     water;
288          [(vii)] (g) the place, [purpose] nature, period, and extent of the [present] approved use;
289          [(viii)] (h) the place, [purpose] nature, period, and extent of the proposed use; [and]
290          (i) if the change applicant is submitting a change application in accordance with
291     Section 73-3-3.5, the information required by Section 73-3-3.5;
292          (j) any proposed change to the storage of water; and
293          [(ix)] (k) any other information that the state engineer requires.
294          [(5) (a) The state engineer shall follow the same procedures, and the rights and duties
295     of the applicants with respect to applications for permanent changes of point of diversion, place
296     of use, or purpose of use shall be the same, as provided in this title for applications to
297     appropriate water.]
298          (6) (a) With respect to a change application for a permanent change:
299          (i) the state engineer shall follow the same procedures provided in this title for
300     approving an application to appropriate water; and
301          (ii) the rights and duties of a change applicant are the same as the rights and duties of a
302     person who applies to appropriate water under this title.
303          (b) The state engineer may waive notice for a permanent change application involving
304     only a change in point of diversion of 660 feet or less.
305          [(6)] (7) (a) The state engineer shall investigate all temporary change applications.
306          (b) If the state engineer finds that the temporary change will not impair a vested water
307     right, the state engineer shall issue an order authorizing the change.
308          (c) If the state engineer finds that the change sought might impair a vested water right,
309     before authorizing the change, the state engineer shall give notice of the application to any
310     person whose right may be affected by the change.
311          (d) Before making an investigation or giving notice, the state engineer may require the
312     applicant to deposit a sum of money sufficient to pay the expenses of the investigation and
313     publication of notice.
314          [(7)] (8) (a) Except as provided by Section 73-3-30, the state engineer may not reject a
315     permanent or temporary change application for the sole reason that the change would impair a
316     vested water right.
317          (b) If otherwise proper, the state engineer may approve a permanent or temporary
318     change application for part of the water involved or upon the condition that the applicant
319     acquire the conflicting water right or otherwise mitigate the impairment.
320          [(8) (a) A person holding an approved application for the appropriation of water may
321     change the point of diversion, place of use, or purpose of use.]
322          [(b)] (9) A change of an approved application to appropriate water does not:
323          [(i)] (a) affect the priority of the original application to appropriate water; or
324          [(ii)] (b) extend the time period within which the construction of work is to begin or be
325     completed.
326          [(9)] (10) Any person who changes [or who attempts to change] a point of diversion,
327     place of use, or purpose of use, either permanently or temporarily, without first applying to the
328     state engineer in the manner provided in this section[: (a) obtains no right; (b)], is guilty of [a
329     crime] an offense punishable under Section 73-2-27 if the change [or attempted change] is
330     made knowingly or intentionally[; and].
331          [(c) is guilty of a separately punishable offense for each day of the unlawful change.]
332          (11) A person who makes a permanent or temporary change before obtaining an
333     approved change application under this section obtains no additional water right by the change
334     and shall comply with the change application process.
335          [(10)] (12) (a) This section does not apply to the replacement of an existing well by a
336     new well drilled within a radius of 150 feet from the point of diversion of the existing well.
337          (b) Any replacement well must be drilled in accordance with the requirements of
338     Section 73-3-28.
339          Section 4. Section 73-3-3.5 is amended to read:
340          73-3-3.5. Application for a change of point of diversion, place of use, or purpose
341     of use of water in a water company made by a shareholder.
342          (1) As used in this section:
343          (a) "Shareholder" means the owner of a share of stock, or other evidence of stock
344     ownership, that entitles the person to a proportionate share of water in a water company.
345          (b) "Water company" means, except as described in Subsection (1)(c), any company,
346     operating for profit or not for profit, [in which] where a shareholder has the right to receive a
347     proportionate share, based on that shareholder's ownership interest, of water delivered by the
348     company.
349          (c) "Water company" does not include a public water supplier, as defined in Section
350     73-1-4.
351          [(2) A shareholder who seeks to change the point of diversion, place of use, or purpose
352     of use of the shareholder's proportionate share of water in the water company shall submit a
353     request for the change, in writing, to the water company. This request shall include the
354     following information:]
355          [(a) the details of the requested change, which may include the point of diversion,
356     period of use, place, or nature of use;]
357          [(b) the quantity of water sought to be changed;]
358          (2) (a) A shareholder who seeks to file a change application under Section 73-3-3 to
359     make a change to some or all of the water rights represented by the shareholder's shares in a
360     water company shall:
361          (i) prepare a proposed change application on forms furnished by the state engineer; and
362          (ii) provide the proposed change application to the water company by personal delivery
363     with a signed receipt, certified mail, or electronic mail with confirmation of receipt.
364          (b) The water company and the shareholder shall cooperate in supplying information
365     relevant to preparation or correction of the shareholder's change application.
366          (c) In addition to the information required under Section 73-3-3, the proposed change
367     application shall include:
368          [(c)] (i) the certificate number of the stock affected by the change;
369          [(d)] (ii) a description of the land proposed to be retired from irrigation [pursuant to] in
370     accordance with Section 73-3-3, if the proposed change in place or nature of use of the water
371     involves a situation where the water was previously used for irrigation;
372          [(e)] (iii) an agreement by the shareholder to continue to pay all applicable corporate
373     assessments on the share affected by the change; and
374          [(f)] (iv) any other information that the water company may reasonably need to
375     evaluate the [requested] proposed change application.
376          [(3) (a) A water company shall make a decision and provide written notice of that
377     decision on a shareholder's request for a change application within 120 days from receipt of the
378     request.]
379          [(b) Based on the facts and circumstances of each proposed change, a water company
380     may take the following action:]
381          [(i) approve the change request;]
382          [(ii) approve the change request with conditions; or]
383          [(iii) deny the change request.]
384          [(c) If the water company fails to respond to a shareholder's request for a change
385     application, pursuant to Subsection (3)(a), the failure to respond shall be considered to be a
386     denial of the request.]
387          [(d) The water company may not withhold approval if any potential damage, liability,
388     or impairment to the water company, or its shareholders, can be reasonably mitigated without
389     cost to the water company.]
390          [(e) A water company may consider the following factors in evaluating change
391     applications:]
392          (3) (a) The water company shall respond to the proposed change application described
393     in Subsection (2) within 120 days after the day on which the water company receives the
394     proposed change application.
395          (b) The water company's response to the proposed change application shall be in
396     writing and shall:
397          (i) consent to the proposed change;
398          (ii) consent to the proposed change, subject to certain conditions described by the water
399     company; or
400          (iii) decline to consent to the proposed change, describing the reasons for declining to
401     consent.
402          (c) If the water company fails to timely respond, as described in Subsection (3)(a), the
403     failure to respond shall be considered the water company's consent to the proposed change
404     application and the shareholder may file the change application with the state engineer.
405          (4) (a) In reviewing a shareholder's proposed change application, a water company may
406     consider:
407          (i) [any] whether an increased cost to the water company or its shareholders results
408     from the proposed change;
409          (ii) [interference] whether the proposed change will interfere with the water company's
410     ability to manage and distribute water for the benefit of all shareholders;
411          (iii) whether the proposed change represents more water than the shareholder's [pro
412     rata] proportionate share of the water company's right;
413          [(iv) impairment of either]
414          (iv) whether the proposed change would create preferential access to use of particular
415     company water rights to the detriment of other shareholders;
416          (v) whether the proposed change will impair the quantity or quality of water delivered
417     to other shareholders under the existing water rights of the water company, including rights to
418     carrier water;
419          [(v)] (vi) whether the proposed change [would cause a violation of any] violates a
420     statute, ordinance, regulation, or order of a court or [governmental] government agency;
421          [(vi)] (vii) if applicable, whether the shareholder has or can arrange for the beneficial
422     use of water to be retired from irrigation within the water company's service area under the
423     proposed change; [or] and
424          [(vii)] (viii) the cumulative effects that the approval of the change application may
425     have on other shareholders or water company operations.
426          [(4) The water company may require that all costs associated with the change
427     application, including costs of submitting proof, be paid by the shareholder. (5) (a) The]
428          (b) The water company may not withhold consent if any potential damage, liability, or
429     impairment to the water company, or its shareholders, can be reasonably mitigated without cost
430     to the water company.
431          (c) The water company may require the shareholder to pay all reasonable and necessary
432     costs associated with the change application, but may not impose unreasonable exactions.
433          (5) (a) If the water company declines to consent to the proposed change application,
434     stating its reasons, the shareholder may file an action in district court, seeking court review of
435     the reasonableness of the conditions imposed for giving consent or the reasons stated for
436     declining consent and a final order allowing the shareholder to file the proposed change
437     application with the state engineer.
438          (b) If the water company consents to the proposed change application subject to
439     conditions to which the shareholder does not agree, the shareholder may file the change
440     application with the state engineer as provided in Subsection (6), without waiving the
441     shareholder's right to contest conditions set by the water company under Subsection (3)(b)(ii).
442          (c) During or after the completion of the proceeding before the state engineer
443     commenced under Subsection (6), the shareholder may file an action in district court seeking
444     court review of the reasonableness of the conditions imposed by the water company for giving
445     consent.
446          (d) In an action brought under Subsection (5)(a), (b), or (c), the court:
447          (i) shall refer the parties to mediation under Title 78B, Chapter 6, Part 2, Alternative
448     Dispute Resolution Act, unless one or both parties decline mediation; and
449          (ii) may award costs and reasonable attorney fees to the prevailing party if mediation
450     does not occur because the other party declined to participate in mediation.
451          (6) If the water company consents to the proposed change, the water company fails to
452     respond as required by Subsection (3)(a), the court has entered an order described in
453     Subsection (5)(a), or the water company consents to the proposed change subject to conditions
454     to which the shareholder does not agree, as described in Subsection (5)(b), the shareholder may
455     commence an administrative proceeding by filing the change application with the state
456     engineer in accordance with Section 73-3-3 and this section.
457          (7) The shareholder shall include as part of the change application filed with the state
458     engineer under Subsection (5)(b) or (6):
459          (a) the water company's response to the shareholder's proposed change application;
460          (b) if applicable, an affidavit signed by the shareholder documenting the water
461     company's failure to respond in the time period described in Subsection (3)(a); or
462          (c) if applicable, the court order described in Subsection (5)(a).
463          (8) (a) The state engineer shall evaluate a shareholder's change application in the same
464     manner used to evaluate a change application submitted under Section 73-3-3, using the criteria
465     described in Section 73-3-8.
466          (b) Nothing in this section limits the authority of the state engineer in evaluating and
467     processing a change application, including the authority to require or allow a shareholder or
468     water company to submit additional relevant information, if the state engineer finds an absence
469     of prejudice and allows adequate time and opportunity for the other party to respond.
470          (9) If the state engineer approves a shareholder's change application, the state engineer
471     may, for shares included in the approval, require that the shareholder requesting the change
472     [must] be current on all water company assessments and [agree to] continue to pay all
473     reasonably applicable future assessments[, except that the shareholder may choose to prepay
474     any portion of the water company assessments attributable to an existing debt of the water
475     company.], with credit given to the shareholder for any cost savings to the company resulting
476     from the change.
477          [(b) Other than prepaid assessments, the water company may require that the
478     shareholder continue to pay all applicable assessments.]
479          [(6) If the water company approves the requested change, with or without conditions,
480     the change application may be filed with the state engineer, and must:]
481          [(a) be signed on behalf of the water company; or]
482          [(b) be accompanied by written authorization from the water company assenting to the
483     change.]
484          [(7) (a) The state engineer may evaluate a change application authorized by a water
485     company under this section in the same manner and using the same criteria that he or she uses
486     to evaluate any other change application.]
487          [(b) Nothing in this section shall limit the authority of the state engineer in evaluating
488     and processing any change application.]
489          [(8) If an application authorized by a water company under this section is approved by
490     the state engineer, the shareholder may file requests for extensions of time to submit proof of
491     beneficial use under the change application without further permission of the water company.]
492          [(9) (a) Change applications approved under this section are subject to all conditions
493     imposed by the water company and the state engineer.]
494          [(b) If a shareholder fails to comply with all of the conditions imposed by the water
495     company, the water company may, after written notice to the shareholder and after allowing
496     reasonable time to remedy the failure, withdraw its approval of the application, and petition the
497     state engineer for an order canceling the change application.]
498          [(c) The water company may not revoke its approval of the change application or seek
499     an order canceling the application if the conditions are substantially satisfied.]
500          (10) By mutual agreement only, and when the shares will rely upon a different
501     diversion and delivery system, the water company and the shareholder may negotiate a buyout
502     from the water company that may include a pro rata share of the water company's existing
503     indebtedness assignable to the shares.
504          (11) After an application has been approved by the state engineer, the shareholder may
505     file requests for extensions of time to submit proof of beneficial use under the change
506     application without further involvement of the water company.
507          (12) If, after a proposed change has been approved and gone into effect, a shareholder
508     fails to substantially comply with a condition described in Subsection (9), or any condition
509     reasonably imposed by the company and agreed to by the shareholder, and neglects to remedy
510     the failure after written notice from the water company that allows the shareholder a reasonable
511     opportunity to remedy the failure, no less than 90 days after the day on which the water
512     company gives notice, the water company may petition the state engineer to order a reversal of
513     the change application approval.
514          [(10)] (13) (a) The shareholder requesting the change shall have a cause of action,
515     including an award of actual damages incurred, against the water company if the water
516     company:
517          (i) unreasonably withholds approval of a requested change;
518          (ii) imposes unreasonable conditions in its approval; or
519          (iii) withdraws approval of a change application in a manner other than as provided in
520     Subsection [(9)] (12).
521          [(b) The action referred to in Subsection (10)(a) shall be referred to mediation by the
522     court under Title 78B, Chapter 6, Part 2, Alternative Dispute Resolution Act, unless both
523     parties decline mediation.]
524          (b) The court may award costs and reasonable attorney fees:
525          (i) to the shareholder if the court finds that the water company acted in bad faith when
526     it declined to consent to the proposed change or conditioned its consent on excessive exactions
527     or unreasonable conditions; or
528          (ii) to the water company if it finds that the shareholder acted in bad faith in refusing to
529     accept conditions reasonably necessary to protect other shareholders if the shareholder's change
530     application is approved.
531          [(c) If mediation is declined, the prevailing party to the action shall be entitled to costs
532     and reasonable attorney fees.]
533          Section 5. Coordinating H.B. 43 with H.B. 25 -- Technical amendments.
534          If this H.B. 43 and H.B. 25, Water Law - Application Revisions, both pass and become
535     law, it is the intent of the Legislature that the Office of Legislative Research and General
536     Counsel, in preparing the Utah Code database for publication:
537          (1) modify Section 73-3-3 to read:
538          "73-3-3. Permanent or temporary changes to a water right.
539          (1) For purposes of this section:
540          (a) "Permanent change" means a change, for an indefinite period of time [with an intent
541     to relinquish the original point of diversion, place of use, or purpose of use.], to the:
542          (i) point of diversion;
543          (ii) place of use;
544          (iii) period of use;
545          (iv) nature of use; or
546          (v) storage of water.
547          (b) (i) "Quantity impairment" means any reduction in the amount of water a person is
548     able to receive in order to satisfy an existing right to the use of water that would result from an
549     action proposed in a change application, including:
550          (A) diminishing the quantity of water in the source of supply for the existing right;
551          (B) a change in the timing of availability of water from the source of supply for the
552     existing right; or
553          (C) enlarging the quantity of water depleted by the nature of the proposed use when
554     compared with the nature of the currently approved use.
555          (ii) "Quantity impairment" does not mean a decrease in the static level of water in an
556     underground basin or aquifer that would result from an action proposed to be taken in a change
557     application, if the volume of water necessary to satisfy an existing right otherwise remains
558     reasonably available.
559          [(b)] (c) "Temporary change" means a change for a fixed period of time, not exceeding
560     one year[.], to the:
561          (i) point of diversion;
562          (ii) place of use;
563          (iii) period of use;
564          (iv) nature of use; or
565          (v) storage of water.
566          (2) (a) A person who proposes to file a permanent or temporary change application
567     may request consultation with the state engineer, or the state engineer's designee, before filing
568     the application in order to review the requirements of the change application process, discuss
569     potential issues related to the change, and provide the applicant with information.
570          (b) Statements made and information presented in the consultation are not binding on
571     the applicant or the state engineer.
572          (c) The consultation described in Subsection (2)(a) may occur in the state engineer's
573     regional office for the region where the proposed change would occur.
574          [(2)] (3) (a) [Subject to Subsection (2)(c), a] A person entitled to the use of water may
575     make a permanent or temporary [changes in the:] change to an existing right to use water,
576     including a right involved in a general determination of rights or other suit, if:
577          [(i) point of diversion;]
578          [(ii) place of use; or]
579          [(iii) purpose of use for which the water was originally appropriated.]
580          (i) the person makes the change in accordance with this section;
581          [(b) Except] (ii) except as provided by Section 73-3-30, [a] the change [may not be
582     made if it impairs a vested water] does not impair an existing right without just
583     compensation[.] or adequate mitigation; and
584          (iii) the state engineer approves the change application, consistent with the
585     requirements of Section 73-3-8.
586          [(c)] (b) A change application on a federal reclamation project water right shall be
587     signed by:
588          (i) the local water users organization that is contractually responsible for:
589          (A) the operation and maintenance of the project; or
590          (B) the repayment of project costs; and
591          (ii) the record owner of the water right.
592          [(3) A person entitled to use water shall change a point of diversion, place of use, or
593     purpose of water use, including water involved in a general adjudication or other suit, in the
594     manner provided in this section.]
595          [(4) (a) A person entitled to use water may not make a change unless the state engineer
596     approves the change application.]
597          [(b) A] (4) (a) Before making a permanent or temporary change, a person entitled to
598     the use of water shall submit a change application upon forms furnished by the state engineer
599     [and shall set forth:].
600          (b) The application described in Subsection (4)(a) shall include:
601          (i) the applicant's name;
602          (ii) the water right description, including the water right number;
603          (iii) the water quantity;
604          (iv) the stream or water source;
605          (v) if applicable, the point on the stream or water source where the water is diverted;
606          (vi) if applicable, the point to which it is proposed to change the diversion of the water;
607          (vii) the place, [purpose,] nature, period, and extent of the [present] currently approved
608     use;
609          (viii) the place, [purpose,] nature, period, and extent of the proposed use; [and]
610          (ix) if the change applicant is submitting a change application in accordance with
611     Section 73-3-3.5, the information required by Section 73-3-3.5;
612          (x) any proposed change to the storage of water; and
613          [(ix)] (xi) any other information that the state engineer requires.
614          (c) A shareholder in a water company who seeks to make a permanent or temporary
615     change to a water right to which the water company is the record owner shall file a change
616     application in accordance with Section 73-3-3.5.
617          [(5) (a) The state engineer shall follow the same procedures, and the rights and duties
618     of the applicants with respect to applications for permanent changes of point of diversion, place
619     of use, or purpose of use shall be the same, as provided in this title for applications to
620     appropriate water.]
621          [(b) The state engineer may waive notice for a permanent change application involving
622     only a change in point of diversion of 660 feet or less.]
623          [(6) (a) The state engineer shall investigate all temporary change applications.]
624          [(b) If the state engineer finds that the temporary change will not impair a vested water
625     right, the state engineer shall issue an order authorizing the change.]
626          [(c) If the state engineer finds that the change sought might impair a vested water right,
627     before authorizing the change, the state engineer shall give notice of the application to any
628     person whose right may be affected by the change.]
629          [(d) Before making an investigation or giving notice, the state engineer may require the
630     applicant to deposit a sum of money sufficient to pay the expenses of the investigation and
631     publication of notice.]
632          [(7) (a) Except as provided by Section 73-3-30, the state engineer may not reject a
633     permanent or temporary change application for the sole reason that the change would impair a
634     vested water right.]
635          [(b) If otherwise proper, the state engineer may approve a permanent or temporary
636     change application for part of the water involved or upon the condition that the applicant
637     acquire the conflicting water right.]
638          [(8) (a) A person holding an approved application for the appropriation of water may
639     change the point of diversion, place of use, or purpose of use.]
640          (5) In a proceeding before the state engineer, the applicant has the burden of producing
641     evidence sufficient to support a reasonable belief that the change can be made in compliance
642     with this section and Section 73-3-8, including evidence:
643          (a) that the change will not cause a specific existing right to experience quantity
644     impairment; or
645          (b) if applicable, rebutting the presumption of quantity impairment described in
646     Subsection 73-3-8(6)(c).
647          [(b)] (6) A change of an approved application to appropriate water does not:
648          [(i)] (a) affect the priority of the original application to appropriate water; or
649          [(ii)] (b) extend the time period within which the construction of work is to begin or be
650     completed.
651          [(9)] (7) Any person who [changes or who attempts to change a point of diversion,
652     place of use, or purpose of use, either permanently or temporarily, without first applying to the
653     state engineer in the manner provided in this section] makes a permanent or temporary change
654     without first filing and obtaining approval of a change application providing for such change:
655          (a) obtains no Ŝ→ [additional water] ←Ŝ right by the change;
656          (b) is guilty of [a crime] an offense punishable under Section 73-2-27 if the change [or
657     attempted change] is made knowingly or intentionally; and
658          [(c) is guilty of a separately punishable offense for each day of the unlawful change.]
659          (c) shall comply with the change application process.
660          [(10)] (8) (a) This section does not apply to the replacement of an existing well by a
661     new well drilled within a radius of 150 feet from the point of diversion of the existing well.
662          (b) Any replacement well must be drilled in accordance with the requirements of
663     Section 73-3-28."; and
664          (2) modify Section 73-3-8 to read:
665          "73-3-8 Approval or rejection of application -- Requirements for approval --
666     Application for specified period of time -- Filing of royalty contract for removal of salt or
667     minerals.
668          (1) (a) It shall be the duty of the state engineer to approve an application if there is
669     reason to believe that:
670          (i) for an application to appropriate, there is unappropriated water in the proposed
671     source;
672          (ii) the proposed use will not impair existing rights or interfere with the more
673     beneficial use of the water;
674          (iii) the proposed plan:
675          (A) is physically and economically feasible, unless the application is filed by the
676     United States Bureau of Reclamation[,]; and
677          (B) would not prove detrimental to the public welfare;
678          (iv) the applicant has the financial ability to complete the proposed works; [and]
679          (v) the application was filed in good faith and not for purposes of speculation or
680     monopoly[.]; and
681          (vi) if applicable, the application complies with a groundwater management plan
682     adopted under Section 73-5-15.
683          (b) [(i)] If the state engineer, because of information in the state engineer's possession
684     obtained either by the state engineer's own investigation or otherwise, has reason to believe that
685     an application [to appropriate water] will interfere with [its] the water's more beneficial use for
686     irrigation, municipal and industrial, domestic or culinary, stock watering, power or mining
687     development, or manufacturing, or will unreasonably affect public recreation or the natural
688     stream environment, or will prove detrimental to the public welfare, [it is the state engineer's
689     duty to] the state engineer shall withhold approval or rejection of the application until the state
690     engineer has investigated the matter.
691          [(ii)] (c) If an application does not meet the requirements of this section, it shall be
692     rejected.
693          (2) (a) An application to appropriate water for industrial, power, mining development,
694     manufacturing purposes, agriculture, or municipal purposes may be approved for a specific and
695     certain period from the time the water is placed to beneficial use under the application, but in
696     no event may an application be granted for a period of time less than that ordinarily needed to
697     satisfy the essential and primary purpose of the application or until the water is no longer
698     available as determined by the state engineer.
699          (b) At the expiration of the period fixed by the state engineer the water shall revert to
700     the public and is subject to appropriation as provided by this title.
701          (c) No later than 60 calendar days before the expiration date of the fixed time period,
702     the state engineer shall send notice by mail or by any form of electronic communication
703     through which receipt is verifiable, to the applicant of record.
704          (d) Except as provided by Subsection (2)(e), the state engineer may extend any limited
705     water right upon a showing that:
706          (i) the essential purpose of the original application has not been satisfied;
707          (ii) the need for an extension is not the result of any default or neglect by the applicant;
708     and
709          (iii) the water is still available.
710          (e) No extension shall exceed the time necessary to satisfy the primary purpose of the
711     original application.
712          (f) A request for extension of the fixed time period must be filed in writing in the
713     office of the state engineer on or before the expiration date of the application.
714          (3) (a) Before the approval of any application for the appropriation of water from
715     navigable lakes or streams of the state that contemplates the recovery of salts and other
716     minerals therefrom by precipitation or otherwise, the applicant shall file with the state engineer
717     a copy of a contract for the payment of royalties to the state.
718          (b) The approval of an application shall be revoked in the event of the failure of the
719     applicant to comply with terms of the royalty contract.
720          (4) (a) The state engineer shall investigate all temporary change applications.
721          (b) The state engineer shall:
722          (i) approve the temporary change if the state engineer finds there is reason to believe
723     that it will not impair an existing right; and
724          (ii) deny the temporary change if the state engineer finds there is reason to believe it
725     would impair an existing right.
726          (5) (a) With respect to a change application for a permanent change:
727          (i) the state engineer shall follow the same procedures provided in this title for
728     approving an application to appropriate water; and
729          (ii) the rights and duties of a change applicant are the same as the rights and duties of a
730     person who applies to appropriate water under this title.
731          (b) The state engineer may waive notice for a permanent change application if the
732     application only involves a change in point of diversion of 660 feet or less.
733          (c) The state engineer may condition approval of a change application to prevent an
734     enlargement of the quantity of water depleted by the nature of the proposed use when compared
735     with the nature of the currently approved use of water proposed to be changed.
736          (d) A condition described in Subsection (5)(c) may not include a reduction in the
737     currently approved diversion rate of water under the water right identified in the change
738     application solely to account for the difference in depletion under the nature of the proposed
739     use when compared with the nature of the currently approved use.
740          (6) (a) Except as provided in Subsection (6)(b), the state engineer shall reject a
741     permanent change application if the person proposing to make the change is unable to meet the
742     burden described in Subsection 73-3-3(5).
743          (b) If otherwise proper, the state engineer may approve a permanent or temporary
744     change application upon one or more of the following conditions:
745          (i) for part of the water involved;
746          (ii) that the applicant acquire a conflicting right; or
747          (iii) that the applicant provide and implement a plan approved by the state engineer to
748     mitigate impairment of an existing right.
749          (c) (i) There is a rebuttable presumption of quantity impairment, as defined in
750     Subsection 73-3-3(1), to the extent that, for a period of at least seven consecutive years, a
751     portion of the right identified in a change application has not been:
752          (A) diverted from the approved point of diversion; and
753          (B) beneficially used at the approved place of use.
754          (ii) The rebuttable presumption described in Subsection (6)(c)(i) does not apply if the
755     beneficial use requirement is excused by:
756          (A) Subsection 73-1-4(2)(e);
757          (B) an approved nonuse application under Subsection 73-1-4(2)(b);
758          (C) Subsection 73-3-30(7); or
759          (D) the passage of time under Subsection 73-1-4(2)(c)(i).
760          (d) The state engineer may not consider quantity impairment based on the conditions
761     described in Subsection (6)(c) unless the issue is raised in a:
762          (i) timely protest that identifies which of the protestant's existing rights the protestant
763     reasonably believes will experience quantity impairment; or
764          (ii) written notice provided by the state engineer to the applicant within 90 days after
765     the change application is filed.
766          (e) The written notice described in Subsection (6)(d)(ii) shall:
767          (i) specifically identify an existing right the state engineer reasonably believes may
768     experience quantity impairment; and
769          (ii) be mailed to the owner of an identified right, as shown by the state engineer's
770     records, if the owner has not protested the change application.
771          (f) The state engineer is not required to include all rights the state engineer believes
772     may be impaired by the proposed change in the written notice described in Subsection
773     (6)(d)(ii).
774          (g) The owner of a right who receives the written notice described in Subsection
775     (6)(d)(ii) may not become a party to the administrative proceeding if the owner has not filed a
776     timely protest.
777          (h) If a change applicant, all protestants, and all persons identified by the state engineer
778     under Subsection Ŝ→ (6)(d)(ii) or ←Ŝ (6)(e)(ii) come to a written agreement regarding how the
778a     issue of quantity
779     impairment shall be mitigated, the state engineer may incorporate the terms of the agreement
780     into a change application approval.".