Senator Scott D. Sandall proposes the following substitute bill:


1     
SECONDARY WATER METERING AMENDMENTS

2     
2022 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Val L. Peterson

5     
Senate Sponsor: Michael K. McKell

6     

7     LONG TITLE
8     General Description:
9          This bill addresses secondary water metering.
10     Highlighted Provisions:
11          This bill:
12          ▸     addresses definitions;
13          ▸     imposes requirements related to metering pressurized secondary water;
14          ▸     provides for penalties for failure to comply with metering requirements;
15          ▸     provides for exemptions;
16          ▸     provides for grants to fund metering of certain pressurized secondary water services;
17          ▸     allows for water conservation grants under certain circumstances;
18          ▸     addresses rulemaking authority; and
19          ▸     makes technical changes.
20     Money Appropriated in this Bill:
21          None
22     Other Special Clauses:
23          None
24     Utah Code Sections Affected:
25     AMENDS:

26          73-10-34, as last amended by Laws of Utah 2021, Chapter 354
27     ENACTS:
28          73-10-34.5, Utah Code Annotated 1953
29     

30     Be it enacted by the Legislature of the state of Utah:
31          Section 1. Section 73-10-34 is amended to read:
32          73-10-34. Secondary water metering -- Loans and grants.
33          (1) As used in this section:
34          (a) (i) "Commercial user" means a secondary water user that is a place of business.
35          (ii) "Commercial user" does not include a multi-family residence, an agricultural user,
36     or a customer that falls within the industrial or institutional classification.
37          (b) "Full metering" means that use of secondary water is accurately metered by a meter
38     that is installed and maintained on every secondary water connection of a secondary water
39     supplier.
40          [(b)] (c) (i) "Industrial user" means a secondary water user that manufactures or
41     produces materials.
42          (ii) "Industrial user" includes a manufacturing plant, an oil and gas producer, and a
43     mining company.
44          [(c)] (d) (i) "Institutional user" means a secondary water user that is dedicated to public
45     service, regardless of ownership.
46          (ii) "Institutional user" includes a school, church, hospital, park, golf course, and
47     government facility.
48          [(d)] (e) (i) "Residential user" means a secondary water user in a residence.
49          (ii) "Residential user" includes a single-family or multi-family home, apartment,
50     duplex, twin home, condominium, or planned community.
51          [(e)] (f) "Secondary water" means water that is:
52          (i) not culinary or water used on land assessed under Title 59, Chapter 2, Part 5,
53     Farmland Assessment Act; and
54          (ii) delivered to and used by an end user for the irrigation of landscaping or a garden.
55          (g) "Secondary water connection" means the location at which the water leaves the
56     secondary water supplier's pipeline and enters into the remainder of the pipes that are owned by

57     another person to supply water to an end user.
58          [(f)] (h) "Secondary water supplier" means an entity that supplies pressurized
59     secondary water.
60          [(g)] (i) "Small secondary water retail supplier" means an entity that:
61          (i) supplies pressurized secondary water only to the end user of the secondary water;
62     and
63          (ii) (A) is a city, town, or metro township; or
64          (B) supplies 5,000 or fewer secondary water connections.
65          (2) (a) (i) A secondary water supplier that supplies secondary water within a county of
66     the first or second class and begins design work for new service on or after April 1, 2020, to a
67     commercial, industrial, institutional, or residential user shall meter the use of pressurized
68     secondary water by the users receiving that new service.
69          (ii) A secondary water supplier that supplies secondary water within a county of the
70     third, fourth, fifth, or sixth class and begins design work for new service on or after May 4,
71     2022, to a commercial, industrial, institutional, or residential user shall meter the use of
72     pressurized secondary water by the users receiving that new service.
73          (b) By no later than January 1, 2030, a secondary water supplier shall install and
74     maintain a meter of the use of pressurized secondary water by each user receiving secondary
75     water service from the secondary water supplier.
76          [(b)] (c) Beginning January 1, 2022, a secondary water supplier shall establish a meter
77     installation reserve for metering installation and replacement projects.
78          [(c)] (d) A secondary water supplier, including a small secondary water retail supplier,
79     may not raise the rates charged for secondary water:
80          (i) by more than 10% in a calendar year for costs associated with metering secondary
81     water unless the rise in rates is necessary because the secondary water supplier experiences a
82     catastrophic failure or other similar event; or
83          (ii) unless, before raising the rates on the end user, the entity charging the end user
84     provides a statement explaining the basis for why the needs of the secondary water supplier
85     required an increase in rates.
86          [(d)] (e) (i) A secondary water supplier that provides pressurized secondary water to a
87     commercial, industrial, institutional, or residential user shall develop a plan, or if the secondary

88     water supplier previously filed a similar plan, update the plan for metering the use of the
89     pressurized water.
90          (ii) The plan required by this Subsection [(2)(d)] (2)(e) shall be filed or updated with
91     the Division of Water Resources by no later than December 31, 2025, and address the process
92     the secondary water supplier will follow to implement metering, including:
93          (A) the costs of full metering by the secondary water supplier;
94          (B) how long it would take the secondary water supplier to complete full metering [by
95     no later than December 31, 2040], including an anticipated beginning date and completion
96     date, except a secondary water supplier shall achieve full metering by no later than January 1,
97     2030; and
98          (C) how the secondary water supplier will finance metering.
99          (3) A secondary water supplier shall on or before March 31 of each year, report to the
100     Division of Water Rights:
101          (a) for commercial, industrial, institutional, and residential users whose pressurized
102     secondary water use is metered, the number of acre feet of pressurized secondary water the
103     secondary water supplier supplied to the commercial, industrial, institutional, and residential
104     users during the preceding 12-month period;
105          (b) the number of secondary water meters within the secondary water supplier's service
106     boundary;
107          (c) a description of the secondary water supplier's service boundary;
108          (d) the number of secondary water connections in each of the following categories
109     through which the secondary water supplier supplies pressurized secondary water:
110          (i) commercial;
111          (ii) industrial;
112          (iii) institutional; and
113          (iv) residential;
114          (e) the total volume of water that the secondary water supplier receives from the
115     secondary water supplier's sources; and
116          (f) the dates of service during the preceding 12-month period in which the secondary
117     water supplier supplied pressurized secondary water.
118          (4) (a) Beginning July 1, 2019, the Board of Water Resources may make up to

119     $10,000,000 in low-interest loans available each year:
120          (i) from the Water Resources Conservation and Development Fund, created in Section
121     73-10-24; and
122          (ii) for financing the cost of secondary water metering.
123          (b) The Division of Water Resources and the Board of Water Resources shall make
124     rules in accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
125     establishing the criteria and process for receiving a loan described in this Subsection (4), except
126     the rules may not include prepayment penalties.
127          (5) (a) Beginning July 1, 2021, subject to appropriation, the Division of Water
128     Resources may make matching grants each year for financing the cost of secondary water
129     metering for a commercial, industrial, institutional, or residential user by a small secondary
130     water retail supplier that:
131          (i) is not for new service described in Subsection (2)(a); and
132          (ii) matches the amount of the grant.
133          (b) For purposes of issuing grants under this section, the division shall prioritize the
134     small secondary water retail suppliers that can demonstrate the greatest need or greatest
135     inability to pay the entire cost of installing secondary water meters.
136          (c) The amount of a grant under this Subsection (5) may not:
137          (i) exceed 50% of the small secondary water retail supplier's cost of installing
138     secondary water meters; or
139          (ii) supplant federal, state, or local money previously allocated to pay the small
140     secondary water retail supplier's cost of installing secondary water meters.
141          (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
142     Board of Water Resources shall make rules establishing:
143          (i) the procedure for applying for a grant under this Subsection (5); and
144          (ii) how a small secondary water retail supplier can establish that the small secondary
145     water retail supplier meets the eligibility requirements of this Subsection (5).
146          [(6) This section does not apply to a secondary water supplier to the extent that:]
147          [(a) the secondary water supplier supplies secondary water within a county of the third,
148     fourth, fifth, or sixth class; or]
149          [(b) there is no meter that a meter manufacturer will warranty because of the water

150     quality within a specific location.]
151          [(7)] (6) Nothing in this section affects a water right holder's obligation to measure and
152     report water usage as described in Sections 73-5-4 and 73-5-8.
153          (7) If a secondary water supplier fails to comply with Subsection (2)(b), the secondary
154     water supplier:
155          (a) beginning January 1, 2030, may not receive state money for water related purposes
156     until the secondary water supplier completes full metering; and
157          (b) is subject to an enforcement action of the state engineer in accordance with
158     Subsection (8).
159          (8) (a) (i) The state engineer shall commence an enforcement action under this
160     Subsection (8) if the state engineer receives a referral from the director of the Division of
161     Water Resources.
162          (ii) The director of the Division of Water Resources shall submit a referral to the state
163     engineer if the director:
164          (A) finds that a secondary water supplier fails to fully meter secondary water as
165     required by this section; and
166          (B) determines an enforcement action is necessary to conserve or protect a water
167     resource in the state.
168          (b) To commence an enforcement action under this Subsection (8), the state engineer
169     shall issue a notice of violation that includes notice of the administrative fine to which a
170     secondary water supplier is subject.
171          (c) The state engineer's issuance and enforcement of a notice of violation is exempt
172     from Title 63G, Chapter 4, Administrative Procedures Act.
173          (d) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, the
174     state engineer shall make rules necessary to enforce a notice of violation, that includes:
175          (i) provisions consistent with this Subsection (8) for enforcement of the notice if a
176     secondary water supplier to whom a notice is issued fails to respond to the notice or abate the
177     violation;
178          (ii) the right to a hearing, upon request by a secondary water supplier against whom the
179     notice is issued; and
180          (iii) provisions for timely issuance of a final order after the secondary water supplier to

181     whom the notice is issued fails to respond to the notice or abate the violation, or after a hearing
182     held under Subsection (8)(d)(ii).
183          (e) A person may not intervene in an enforcement action commenced under this
184     section.
185          (f) After issuance of a final order under rules made pursuant to Subsection (8)(d), the
186     state engineer shall serve a copy of the final order on the secondary water supplier against
187     whom the order is issued by:
188          (i) personal service under Utah Rules of Civil Procedure, Rule 5; or
189          (ii) certified mail.
190          (g) (i) The state engineer's final order may be reviewed by trial de novo by the district
191     court in Salt Lake County or the county where the violation occurred.
192          (ii) A secondary water supplier shall file a petition for judicial review of the state
193     engineer's final order issued under this section within 20 days from the day on which the final
194     order was served on the secondary water supplier.
195          (h) The state engineer may bring suit in a court of competent jurisdiction to enforce a
196     final order issued under this Subsection (8).
197          (i) If the state engineer prevails in an action brought under Subsection (8)(g) or (h), the
198     state may recover court costs and a reasonable attorney fee.
199          (j) As part of a final order issued under this Subsection (8), the state engineer shall
200     order that a secondary water supplier to whom an order is issued pay an administrative fine
201     equal to:
202          (i) $10 for each secondary water connection of the secondary water supplier for failure
203     to comply with full metering by January 1, 2030;
204          (ii) $20 for each secondary water connection of the secondary water supplier for failure
205     to comply with full metering by January 1, 2031;
206          (iii) $30 for each secondary water connection of the secondary water supplier for
207     failure to comply with full metering by January 1, 2032;
208          (iv) $40 for each secondary water connection of the secondary water supplier for
209     failure to comply with full metering by January 1, 2033; and
210          (v) $50 for each secondary water connection of the secondary water supplier for failure
211     to comply with full metering by January 1, 2034, and for each subsequent year the secondary

212     water supplier fails to comply with full metering.
213          (k) Money collected under this Subsection (8) shall be deposited into the Water
214     Resources Conservation and Development Fund, created in Section 73-10-24.
215          (9) A secondary water supplier located within a county of the fifth or sixth class is
216     exempt from Subsections (2)(a), (2)(b), (2)(c), (2)(e), (7), and (8) if:
217          (a) the owner or operator of the secondary water supplier seeks an exemption under
218     this Subsection (9) by establishing with the Division of Water Resources that the cost of
219     purchasing, installing, and upgrading systems to accept meters exceeds 25% of the total
220     operating budget of the owner or operator of the secondary water supplier;
221          (b) the secondary water supplier agrees to not add a new secondary water connection to
222     the secondary water supplier's system on or after May 4, 2022;
223          (c) within six months of when the secondary water supplier seeks an exemption under
224     Subsection (9)(a), the secondary water supplier provides to the Division of Water Resources a
225     plan for conservation within the secondary water supplier's service area that does not require
226     metering;
227          (d) the secondary water supplier annually reports to the Division of Water Resources
228     on the results of the plan described in Subsection (9)(c); and
229          (e) the secondary water supplier submits to evaluations by the Division of Water
230     Resources of the effectiveness of the plan described in Subsection (9)(c).
231          (10) A secondary water supplier is exempt from Subsections (2)(a), (2)(b), (2)(c),
232     (2)(e), (7), and (8) to the extent that the secondary water supplier:
233          (a) is unable to obtain a meter that a meter manufacturer will warranty because of the
234     water quality within a specific location served by the secondary water supplier;
235          (b) submits reasonable proof to the Division of Water Resources that the secondary
236     water supplier is unable to obtain a meter as described in Subsection (10)(a);
237          (c) within six months of when the secondary water supplier submits reasonable proof
238     under Subsection (10)(b), provides to the Division of Water Resources a plan for conservation
239     within the secondary water supplier's service area that does not require metering;
240          (d) annually reports to the Division of Water Resources on the results of the plan
241     described in Subsection (10)(c); and
242          (e) submits to evaluations by the Division of Water Resources of the effectiveness of

243     the plan described in Subsection (10)(c).
244          (11) A secondary water supplier that is located within a critical management area that
245     is subject to a groundwater management plan adopted or amended under Section 73-5-15 on or
246     after May 1, 2006, is exempt from Subsections (2)(a), (2)(b), (2)(c), (2)(e), (7), and (8).
247          (12) If a secondary water supplier is required to have a water conservation plan under
248     Section 73-10-32, that water conservation plan satisfies the requirements of Subsection (9)(c)
249     or (10)(c).
250          Section 2. Section 73-10-34.5 is enacted to read:
251          73-10-34.5. Grant money for existing secondary water metering to facilitate full
252     metering -- Other grants.
253          (1) As used in this section:
254          (a) "Applicant" means a secondary water supplier or group of secondary water
255     suppliers that applies for a grant under this section.
256          (b) "Board" means the Board of Water Resources.
257          (c) "Division" means the Division of Water Resources.
258          (d) "Project" means the purchase or installation of a meter for a secondary water
259     system that as of May 4, 2022, provides secondary water service that is not metered.
260          (e) "Secondary water" means the same as that term is defined in Section 73-10-34.
261          (f) "Secondary water connection" means the same as that term is defined in Section
262     73-10-34.
263          (g) "Secondary water supplier" means the same as that term is defined in Section
264     73-10-34.
265          (2) (a) The board may issue grants in an amount appropriated by the Legislature in
266     accordance with this section to an applicant to fund projects for meters on secondary water
267     systems that before May 4, 2022, provide secondary water service that is not metered.
268          (b) The board may not issue a grant under this section to fund:
269          (i) metering of secondary water for service that begins on or after May 4, 2022; or
270          (ii) the replacement or repair of an existing secondary water meter.
271          (c) Notwithstanding the other provisions of this section, the board may issue a grant
272     under this section to a secondary water supplier to reimburse the secondary water supplier for
273     the costs incurred by the secondary water supplier that are associated with installing meters on

274     a secondary water system on or after March 3, 2021, but before May 4, 2022, except that the
275     grant issued under this Subsection (2)(c):
276          (i) shall be included in calculating the total grant amount under Subsections (3)(a)
277     through (c);
278          (ii) may not exceed 70% of the costs associated with a project described in this
279     Subsection (2)(c), including installation and purchase of meters; and
280          (iii) shall comply with Subsection (6).
281          (3) (a) A secondary water supplier with 7,000 secondary water connections or less is
282     eligible for a total grant amount under this section of up to $5,000,000.
283          (b) A secondary water supplier with more than 7,000 secondary water connections is
284     eligible for a total grant amount under this section of up to $10,000,000.
285          (c) If a secondary water supplier applies for a grant as part of a group of secondary
286     water suppliers, the total grant amount described in Subsection (3)(a) or (b) applies to each
287     member of the group and is not based on the number of secondary water connections of the
288     entire group.
289          (d) (i) Subject to the other provisions of this section, a grant may not exceed the
290     following amounts for the costs associated with a project, including installation and purchase
291     of meters:
292          (A) for calendar year 2022, 70% of the costs of a project;
293          (B) for calendar year 2023, 70% of the costs of a project;
294          (C) for calendar year 2024, 65% of the costs of a project;
295          (D) for calendar year 2025, 60% of the costs of a project; and
296          (E) for calendar year 2026, 50% of the costs of a project.
297          (ii) Beginning with calendar year 2027, a grant under this section shall consist of
298     providing a meter or funding to obtain a meter, which may not exceed the following for costs
299     associated with the project:
300          (A) for calendar year 2027, 40% of the costs of a project;
301          (B) for calendar year 2028, 30% of the costs of a project;
302          (C) for calendar year 2029, 20% of the costs of a project; and
303          (D) for calendar year 2030, 10% of the costs of a project.
304          (e) A secondary water supplier may pay the secondary water supplier's portion of the

305     costs of a project through a loan from the board under Section 73-10-34 by filing a separate
306     application with the board.
307          (f) A meter purchased with grant money received under this section shall allow for data
308     communication between the meter and other devices designed to manage use of secondary
309     water that is:
310          (i) open and available to an end user; and
311          (ii) open so that it can integrate with third-party providers.
312          (4) (a) (i) To obtain a grant under this section, an applicant shall submit an application
313     with the division during a period of time designated by the board.
314          (ii) If there remains money described in Subsection (2) after the grants for applications
315     submitted during the time period described in Subsection (4)(a) are awarded, the board may
316     designate one or more additional time periods so that the entire amount described in Subsection
317     (2) is awarded by December 31, 2024.
318          (b) An application submitted to the division shall include:
319          (i) a detailed project cost estimate including meter costs and installation costs;
320          (ii) a total number of pressurized secondary water connections in the applicable
321     secondary water supplier's system;
322          (iii) the number of meters to be installed under the grant;
323          (iv) a detailed estimated secondary water use reduction including:
324          (A) average lot size calculations;
325          (B) average irrigated acreage; and
326          (C) estimated water applied before the project versus after completion of the project;
327          (v) the timeline for purchase and installation of meters under the project;
328          (vi) an agreement to:
329          (A) provide an educational component for end users as determined by the division by
330     rule made in accordance with Title 63G, Utah Administrative Rulemaking Act, either on a
331     monthly statement or by a customer specific Internet portal that provides information on the
332     customer's usage more frequently than monthly; or
333          (B) bill according to usage using a tiered conservation rate and provide an educational
334     component described in Subsection (4)(b)(vi)(A); and
335          (vii) additional information the board considers helpful.

336          (5) (a) The division shall:
337          (i) review and prioritize an application submitted under Subsection (4); and
338          (ii) recommend to the board which applicants should be awarded a grant under this
339     section.
340          (b) In prioritizing applications under this Subsection (5), the division shall rank the
341     applicants on the basis of the following weighted factors:
342          (i) 60% weight based on the ratio of estimated water use reduction divided by total
343     state investment;
344          (ii) 20% weight based on an applicant facing current or potential water shortages when
345     installation of meters and subsequent water use reductions will result in delaying or eliminating
346     the need for new water development; and
347          (iii) 20% weight based on a project's accelerated construction schedule, prompt start,
348     and prompt finish.
349          (6) As a condition of receiving a grant under this section, the recipient shall enter into
350     an agreement with the board to use the grant money. The agreement shall:
351          (a) be executed by no later than December 31, 2024; and
352          (b) require that the grant money be spent by December 31, 2026, and the project
353     completed under the terms of the grant.
354          (7) Notwithstanding the other provisions of this section, the board may issue a grant to
355     a secondary water supplier:
356          (a) that installed meters on secondary water connections before May 4, 2022;
357          (b) that has not otherwise received a grant under this section;
358          (c) for the purpose of water conservation; and
359          (d) in an amount not to exceed $2,000,000.
360          (8) In accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, and
361     consistent with this section, the board may make rules establishing the procedure for applying
362     for a grant under this section.