Senator Michael K. McKell proposes the following substitute bill:




Chief Sponsor: Carl R. Albrecht

Senate Sponsor: Michael K. McKell


8     General Description:
9          This bill addresses emergency shortages of water declared by the governor.
10     Highlighted Provisions:
11          This bill:
12          ▸     amends the powers of the Department of Agriculture and Food;
13          ▸     provides for the use of money in the Agriculture Resource Development Fund for
14     emergency water shortages loans;
15          ▸     addresses governmental immunity;
16          ▸     enacts the Water Preferences During Emergencies chapter, including:
17               •     defining terms;
18               •     providing for scope of the chapter;
19               •     outlining the process for declaring a temporary water shortage emergency;
20               •     addressing water use preferences under a temporary water shortage emergency;
21               •     providing for compensation related to water use preferences; and
22               •     addressing rulemaking by the Department of Agriculture and Food;
23          ▸     repeals existing statutes related to water preferences and a study; and
24          ▸     makes technical changes.
25     Money Appropriated in this Bill:

26          This bill appropriates for fiscal year 2024:
27          ▸     to the Department of Agriculture and Food - Agriculture Resource Development
28     Fund, as a one-time appropriation:
29               •      from the General Fund, $5,000,000.
30     Other Special Clauses:
31          None
32     Utah Code Sections Affected:
33     AMENDS:
34          4-2-103, as last amended by Laws of Utah 2022, Chapters 68, 79
35          4-18-105, as last amended by Laws of Utah 2022, Chapter 68
36          4-18-106, as last amended by Laws of Utah 2022, Chapter 79
37          63G-7-302, as last amended by Laws of Utah 2022, Chapter 388
38     ENACTS:
39          73-3d-101, Utah Code Annotated 1953
40          73-3d-102, Utah Code Annotated 1953
41          73-3d-201, Utah Code Annotated 1953
42          73-3d-202, Utah Code Annotated 1953
43          73-3d-301, Utah Code Annotated 1953
44          73-3d-302, Utah Code Annotated 1953
45          73-3d-401, Utah Code Annotated 1953
46          73-3d-402, Utah Code Annotated 1953
47          73-3d-403, Utah Code Annotated 1953
48     REPEALS:
49          73-3-21.3, as enacted by Laws of Utah 2022, Chapter 311
50          73-3-21.5, as enacted by Laws of Utah 2022, Chapter 311

52     Be it enacted by the Legislature of the state of Utah:
53          Section 1. Section 4-2-103 is amended to read:
54          4-2-103. Functions, powers, and duties of department -- Fees for services --
55     Marketing orders -- Procedure -- Purchasing and auditing.
56          (1) The department shall:

57          (a) inquire into and promote the interests and products of agriculture and allied
58     industries;
59          (b) promote methods for increasing the production and facilitating the distribution of
60     the agricultural products of the state;
61          (c) (i) inquire into the cause of contagious, infectious, and communicable diseases
62     among livestock and the means for their prevention and cure; and
63          (ii) initiate, implement, and administer plans and programs to prevent the spread of
64     diseases among livestock;
65          (d) encourage experiments designed to determine the best means and methods for the
66     control of diseases among domestic and wild animals;
67          (e) issue marketing orders for any designated agricultural product to:
68          (i) promote orderly market conditions for any product;
69          (ii) give the producer a fair return on the producer's investment at the marketplace; and
70          (iii) only promote and not restrict or restrain the marketing of Utah agricultural
71     commodities;
72          (f) administer and enforce all laws assigned to the department by the Legislature;
73          (g) establish standards and grades for agricultural products and fix and collect
74     reasonable fees for services performed by the department in conjunction with the grading of
75     agricultural products;
76          (h) establish operational standards for any establishment that manufactures, processes,
77     produces, distributes, stores, sells, or offers for sale any agricultural product;
78          (i) adopt, according to Title 63G, Chapter 3, Utah Administrative Rulemaking Act,
79     rules necessary for the effective administration of the agricultural laws of the state;
80          (j) when necessary, make investigations, subpoena witnesses and records, conduct
81     hearings, issue orders, and make recommendations concerning matters related to agriculture;
82          (k) (i) inspect any nursery, orchard, farm, garden, park, cemetery, greenhouse, or any
83     private or public place that may become infested or infected with harmful insects, plant
84     diseases, noxious or poisonous weeds, or other agricultural pests;
85          (ii) establish and enforce quarantines;
86          (iii) issue and enforce orders and rules for the control and eradication of pests,
87     wherever they may exist within the state; and

88          (iv) perform other duties relating to plants and plant products considered advisable and
89     not contrary to law;
90          (l) inspect apiaries for diseases inimical to bees and beekeeping;
91          (m) take charge of any agricultural exhibit within the state, if considered necessary by
92     the department, and award premiums at that exhibit;
93          (n) provide for the coordination of state conservation efforts, including by:
94          (i) assisting the Conservation Commission in the administration of Chapter 18,
95     Conservation Commission Act;
96          (ii) implementing Chapter 46, Conservation Coordination Act, including entering into
97     agreements with other state agencies; and
98          (iii) administering and disbursing money available to assist conservation districts in the
99     state in the conservation of the state's soil and water resources;
100          (o) participate in the United States Department of Agriculture certified agricultural
101     mediation program, in accordance with 7 U.S.C. Sec. 5101 and 7 C.F.R. Part 785;
102          (p) promote and support the multiple use of public lands;
103          (q) ensure that any training or certification required of a public official or public
104     employee, as those terms are defined in Section 63G-22-102, complies with Title 63G, Chapter
105     22, State Training and Certification Requirements, if the training or certification is required:
106          (i) under this title;
107          (ii) by the department; or
108          (iii) by an entity within the department; [and]
109          (r) in accordance with Title 73, Chapter 3d, Part 4, Compensation:
110          (i) conduct mediation or arbitration; and
111          (ii) assist in the issuance of loans by the Conservation Commission; and
112          [(r)] (s) perform any additional functions, powers, and duties provided by law.
113          (2) The department, by following the procedures and requirements of Section
114     63J-1-504, may adopt a schedule of fees assessed for services provided by the department.
115          (3) (a) A marketing order issued under Subsection (1)(e) may not take effect until:
116          (i) the department gives notice of the proposed order to the producers and handlers of
117     the affected product;
118          (ii) the commissioner conducts a hearing on the proposed order; and

119          (iii) at least 50% of the registered producers and handlers of the affected products vote
120     in favor of the proposed order.
121          (b) (i) The department may establish boards of control to administer marketing orders
122     and the proceeds derived from any order.
123          (ii) A board of control shall:
124          (A) ensure that proceeds are placed in an account in the board of control's name in a
125     depository institution; and
126          (B) ensure that the account is annually audited by an accountant approved by the
127     commissioner.
128          (4) Money collected by grain grading, as provided by Subsection (1)(g), shall be
129     deposited into the General Fund as dedicated credits for the grain grading program.
130          (5) In fulfilling the department's duties in this chapter, the department may:
131          (a) purchase, as authorized or required by law, services that the department is
132     responsible to provide for legally eligible persons;
133          (b) take necessary steps, including legal action, to recover money or the monetary value
134     of services provided to a recipient who is not eligible;
135          (c) examine and audit the expenditures of any public funds provided to a local
136     authority, agency, or organization that contracts with or receives funds from those authorities or
137     agencies;
138          (d) accept and administer grants from the federal government and from other sources,
139     public or private; and
140          (e) fund grants using money appropriated by the Legislature or money received from
141     any other source.
142          Section 2. Section 4-18-105 is amended to read:
143          4-18-105. Conservation Commission -- Functions and duties.
144          (1) The commission shall:
145          (a) facilitate the development and implementation of the strategies and programs
146     necessary to:
147          (i) protect, conserve, use, and develop the soil, water, and air resources of the state; and
148          (ii) promote the protection, integrity, and restoration of land for agricultural and other
149     beneficial purposes;

150          (b) disseminate information regarding districts' activities and programs;
151          (c) supervise the formation, reorganization, or dissolution of districts according to the
152     requirements of Title 17D, Chapter 3, Conservation District Act;
153          (d) prescribe uniform accounting and recordkeeping procedures for districts and
154     require each district to submit annually the information required in Section 17D-3-103;
155          (e) approve and make loans for [agricultural] purposes listed in Section 4-18-106,
156     through the loan advisory board described in Section 4-18-106, from the Agriculture Resource
157     Development Fund;
158          (f) seek to obtain and administer federal or state money in accordance with applicable
159     federal or state guidelines and make loans or grants from that money to an eligible entity, as
160     defined by the department by rule made in accordance with Title 63G, Chapter 3, Utah
161     Administrative Rulemaking Act, for the preservation of soil, water, and air resources, or for a
162     reason set forth in Section 4-18-108;
163          (g) seek to coordinate soil and water protection, conservation, and development
164     activities and programs of state agencies, local governmental units, other states, special interest
165     groups, and federal agencies;
166          (h) when assigned by the governor, when required by contract with the Department of
167     Environmental Quality, or when required by contract with the United States Environmental
168     Protection Agency:
169          (i) develop programs for the prevention, control, or abatement of new or existing
170     pollution to the soil, water, or air of the state;
171          (ii) advise, consult, and cooperate with affected parties to further the purpose of this
172     chapter;
173          (iii) conduct studies, investigations, research, and demonstrations relating to
174     agricultural pollution issues;
175          (iv) give reasonable consideration in the exercise of its powers and duties to the
176     economic impact on sustainable agriculture;
177          (v) meet the requirements of federal law related to water and air pollution in the
178     exercise of the commission's powers and duties; and
179          (vi) establish administrative penalties relating to agricultural discharges as defined in
180     Section 4-18-103 that are proportional to the seriousness of the resulting environmental harm;

181     and
182          (i) coordinate with the Division of Conservation created in Section 4-46-401.
183          (2) The commission may:
184          (a) employ, with the approval of the department, an administrator and necessary
185     technical experts and employees;
186          (b) execute contracts or other instruments necessary to exercise the commission's
187     powers;
188          (c) take necessary action to promote and enforce the purpose and findings of Section
189     4-18-102;
190          (d) sue and be sued; and
191          (e) adopt rules, in accordance with Title 63G, Chapter 3, Utah Administrative
192     Rulemaking Act, necessary to carry out the powers and duties described in Subsection (1) and
193     Subsections (2)(b) and (c).
194          Section 3. Section 4-18-106 is amended to read:
195          4-18-106. Agriculture Resource Development Fund -- Contents -- Use of fund
196     money -- Advisory board.
197          (1) As used in this section:
198          (a) "Disaster" means an extraordinary circumstance, including a flood, drought, or fire,
199     that results in:
200          (i) the president of the United States declaring an emergency or major disaster in the
201     state;
202          (ii) the governor declaring a state of emergency under Title 53, Chapter 2a, Part 2,
203     Disaster Response and Recovery Act; or
204          (iii) the chief executive officer of a local government declaring a local emergency
205     under Title 53, Chapter 2a, Part 2, Disaster Response and Recovery Act.
206          (b) "Fund" means the Agriculture Resource Development Fund created in this section.
207          [(b)] (c) "Local government" means the same as that term is defined in Section
208     53-2a-602.
209          (2) There is created a revolving loan fund known as the "Agriculture Resource
210     Development Fund."
211          (3) The [Agriculture Resource Development Fund] fund shall consist of:

212          (a) money appropriated to the fund by the Legislature;
213          (b) sales and use tax receipts transferred to the fund in accordance with Section
214     59-12-103;
215          (c) money received for the repayment of loans made from the fund;
216          (d) money from a preferential user to reimburse the commission for loans made from
217     the fund in accordance with Title 73, Chapter 3d, Part 4, Compensation;
218          [(d)] (e) money made available to the state for agriculture resource development or for
219     a temporary water shortage emergency, as defined in Section 73-3d-101, from any source; and
220          [(e)] (f) interest earned on the fund.
221          (4) The commission may make loans from the [Agriculture Resource Development
222     Fund] fund for:
223          (a) a rangeland improvement and management project;
224          (b) a watershed protection or flood prevention project;
225          (c) a soil and water conservation project;
226          (d) a program designed to promote energy efficient farming practices;
227          (e) an improvement program for agriculture product storage or program designed to
228     protect a crop or animal resource;
229          (f) a hydroponic or aquaponic system;
230          (g) a project or program to improve water quality;
231          (h) a project to address other environmental issues; [or]
232          (i) subject to Subsection (5), a disaster relief program designed to aid the sustainability
233     of agriculture during and immediately following a disaster[.]; or
234          (j) subject to Subsection (6), authorized for temporary water shortage emergencies as
235     provided in Title 73, Chapter 3d, Part 4, Compensation.
236          (5) (a) Loans made through a disaster relief program described in Subsection (4)(i) may
237     not comprise more than 10% of the funds appropriated by the Legislature to the [Agriculture
238     Resource Development Fund] fund.
239          (b) Notwithstanding Subsection (5)(a), the department may use [all] the money
240     appropriated to the [Agriculture Resource Development Fund] fund by the Legislature or
241     another source, without limitation, if the money is appropriated specifically for use in a disaster
242     relief program.

243          (c) (i) Until December 31, 2024, the department is authorized to borrow up to
244     $3,000,000 of General Fund appropriations from the Agricultural Water Optimization Account
245     created in Section 73-10g-204 to be used in making loans through a disaster relief program
246     described in Subsection (4)(i).
247          (ii) If the department borrows from the Agricultural Water Optimization Account
248     under Subsection (5)(c)(i), the department shall deposit the repayment of principal and interest
249     on loans made through a disaster relief program, regardless of the source of the funds used to
250     make those loans, into the Agricultural Water Optimization Account, with preference over the
251     repayment of any other source of funds, until the Agricultural Water Optimization Account is
252     repaid in full.
253          (6) The commission may not have at one time an aggregate amount of loans made
254     under Subsection (4)(j) that exceeds $5,000,000.
255          [(6)] (7) The commission may appoint an advisory board to:
256          (a) oversee the award process for loans, as described in this section;
257          (b) approve loans; and
258          (c) recommend policies and procedures for the [Agriculture Resource Development
259     Fund] fund that are consistent with statute.
260          Section 4. Section 63G-7-302 is amended to read:
261          63G-7-302. Assessment of compensation and damages in an action for taking or
262     damaging private property.
263          (1) [In any] Except as provided in Subsection (2), in an action brought under [the
264     authority of] Utah Constitution, Article I, Section 22, [of the Utah Constitution] for the
265     recovery of compensation from the governmental entity when the governmental entity has
266     taken or damaged private property for public uses without just compensation, compensation
267     and damages shall be assessed according to [the requirements of] Title 78B, Chapter 6, Part 5,
268     Eminent Domain.
269          (2) In an action brought under Utah Constitution, Article I, Section 22, for the recovery
270     of compensation for the interruption of water use in the case of a temporary water shortage
271     emergency that results in the taking or damage of property for public uses without just
272     compensation, compensation and damages shall be assessed in accordance with Title 73,
273     Chapter 3d, Water Preferences During Emergencies.

274          Section 5. Section 73-3d-101 is enacted to read:

Part 1. General Provisions

277          73-3d-101. Definitions.
278          As used in this chapter:
279          (1) "Electric utility" means:
280          (a) a municipal electric utility, as defined in Section 10-19-102;
281          (b) an electric interlocal entity, as defined in Section 11-13-103;
282          (c) an energy services interlocal entity, as defined in Section 11-13-103;
283          (d) a project entity, as defined in Section 11-13-103;
284          (e) an electric improvement district, as defined in Section 17B-2a-406; or
285          (f) an electrical corporation, as defined in Section 54-2-1.
286          (2) "Military facility" means an installation, base, air field, camp, post, station, yard,
287     center, or other facility owned, leased, or operated by, or under the jurisdiction of, the United
288     States Department of Defense or the National Guard.
289          (3) "Person entitled to make a request" means:
290          (a) the holder of an approved but unperfected application to appropriate water;
291          (b) the record owner of a perfected water right; or
292          (c) a person who provides water using an approved but unperfected application or a
293     perfected water right with the written authorization of a person described in Subsection (3)(a)
294     or (b).
295          (4) "Temporary water shortage emergency" means an interruption of water delivery for
296     which the governor may declare an emergency in accordance with Section 73-3d-201.
297          Section 6. Section 73-3d-102 is enacted to read:
298          73-3d-102. Scope of chapter.
299          (1) (a) The powers vested in the governor under this chapter are in addition to, and not
300     in lieu of, any other emergency powers otherwise statutorily vested in the governor, including
301     the power of the governor to authorize the use of water sources as necessary for fire
302     suppression under Subsection 53-2a-204(1)(o).
303          (b) An executive order of the governor declaring a temporary water shortage
304     emergency under this chapter is not a declaration of a state of emergency under Section

305     53-2a-206 and is not subject to Title 53, Chapter 2a, Part 2, Disaster Response and Recovery
306     Act. To exercise an authority granted under Title 53, Chapter 2a, Part 2, Disaster Response and
307     Recovery Act, related to a declaration of a state of emergency, the governor shall issue an
308     executive order that is separate from an executive order declaring a temporary water shortage
309     emergency.
310          (2) Nothing in this chapter modifies:
311          (a) the statutory duties of the state engineer under this title; or
312          (b) except as specifically provided in an executive order declaring a temporary water
313     shortage emergency, Subsection 73-3-1(5)(a) or Section 73-3-21.1.
314          (3) Nothing in this chapter may be construed to extend or enlarge the powers of the
315     governor except as specifically stated in this chapter.
316          Section 7. Section 73-3d-201 is enacted to read:
Part 2. Declaration of Temporary Water Shortage Emergency

318          73-3d-201. Declaration of a temporary water shortage emergency by the
319     governor.
320          (1) (a) Subject to the requirements of this section, the governor may declare a
321     temporary water shortage emergency by issuing an executive order if, on the governor's own
322     initiative or at the request of a person entitled to make a request, the governor determines that
323     an existing or imminent short-term interruption of water delivery in this state caused by
324     manmade or natural causes other than drought:
325          (i) threatens:
326          (A) the availability or quality of an essential water supply or water supply
327     infrastructure; or
328          (B) the operation of the economy; and
329          (ii) because of the threats described in Subsection (1)(a)(i), jeopardizes the peace,
330     health, safety, or welfare of the people of this state.
331          (b) The governor may only issue the executive order declaring a temporary water
332     shortage emergency described in Subsection (1)(a):
333          (i) with the advice and recommendation of the state engineer; and
334          (ii) in consultation with the emergency management administration committee created
335     by Section 53-2a-105.

336          (c) An executive order issued under this Subsection (1) shall state with specificity:
337          (i) the nature of the interruption of water supply;
338          (ii) subject to Subsection (2), the time period for which the temporary water shortage
339     emergency is declared;
340          (iii) a description of the geographic area that is subject to the executive order;
341          (iv) a list of the specific persons entitled to make a request who may exercise the
342     preferential use of water under Section 73-3d-301 during the effective period of the temporary
343     water shortage emergency; and
344          (v) the purposes outlined in Subsection 73-3d-301(1) for which a person who is
345     described in Subsection (1)(c)(iv) may take the water subject to Section 73-3d-301.
346          (d) Before providing a recommendation to the governor under Subsection (1)(b)(i), the
347     state engineer shall require a person entitled to make a request who is described in Subsection
348     (1)(c)(iv) to provide a written statement describing how the person entitled to make a request
349     has exhausted other reasonable means to acquire water.
350          (e) A person entitled to make a request who is described in Subsection (1)(c)(iv) may
351     take water preferentially during a temporary water shortage emergency only for a purpose
352     authorized by the executive order.
353          (f) (i) Within seven calendar days of the day on which the governor issues an executive
354     order declaring a temporary water shortage emergency, the Legislative Management
355     Committee shall:
356          (A) review the executive order;
357          (B) advise the governor on the declaration of a temporary water shortage emergency;
358     and
359          (C) recommend to the Legislature whether the executive order should be kept as issued
360     by the governor, extended, or terminated.
361          (ii) The failure of the Legislative Management Committee to meet as required by
362     Subsection (1)(f)(i) does not affect the validity of the executive order declaring a temporary
363     water shortage emergency.
364          (2) (a) The governor shall state in an executive order declaring a temporary water
365     shortage emergency the time period for which the temporary water shortage emergency is
366     declared, except that the governor may not declare a temporary water shortage emergency for

367     longer than 30 days after the date the executive order is issued.
368          (b) The governor may terminate an executive order declaring a temporary water
369     shortage emergency before the expiration of the time period stated in the executive order.
370          (c) An executive order declaring a temporary water emergency issued by the governor
371     within 30 days of the expiration or termination of a prior executive order for the same
372     emergency is considered an extension subject to Subsection (2)(e).
373          (d) The Legislature may extend the time period of an executive order declaring a
374     temporary water shortage emergency by joint resolution, except that the Legislature may not
375     extend a temporary water shortage emergency for longer than one year from the day on which
376     the executive order declaring a temporary water shortage emergency is issued.
377          (e) An executive order declaring a temporary water shortage emergency may be
378     renewed or extended only by joint resolution of the Legislature.
379          Section 8. Section 73-3d-202 is enacted to read:
380          73-3d-202. Existing agencies to be used in implementation.
381          The governor shall use, to the extent practicable, existing state boards, commissions, or
382     agencies, or officers or employees for the purpose of carrying out this chapter.
383          Section 9. Section 73-3d-301 is enacted to read:
Part 3. Preferences Under a Temporary Water Shortage Emergency

385          73-3d-301. Preferences between persons using water.
386          (1) Notwithstanding Section 73-3-21.1, if the governor issues an executive order
387     declaring a temporary water shortage emergency under this chapter:
388          (a) use of water is preferred over other water use during the time period of the
389     temporary water shortage emergency under the executive order if the water is used in
390     accordance with the executive order:
391          (i) for one or more of the following purposes, with preference exercised in the order
392     listed:
393          (A) drinking;
394          (B) sanitation;
395          (C) fire suppression;
396          (D) commercial agriculture animal welfare needs; or
397          (E) generation of electricity; and

398          (ii) by one of the following:
399          (A) a public water supplier, as defined in Section 73-1-4;
400          (B) a military facility that was in operation on March 10, 2011;
401          (C) a commercial agriculture operation for purposes described in Subsection
402     (1)(a)(i)(D); or
403          (D) an electric utility; and
404          (b) use of water for agricultural purposes, including irrigation, livestock watering, or
405     food processing, is preferred over other rights, except as provided in Subsection (1)(a).
406          (2) A preference for fire suppression under Subsection (1) is in addition to the
407     governor's authorization to use water sources as necessary for fire suppression under
408     Subsection 53-2a-204(1)(o).
409          (3) The state engineer shall determine, consistent with the executive order declaring a
410     temporary water shortage emergency, through a priority schedule, which water rights a person
411     specified in the executive order as required by Subsection 73-3d-201(1)(c)(iv) may interrupt for
412     purposes of this section.
413          (4) (a) A person entitled to make a request who uses water preferentially during a
414     temporary water shortage emergency shall measure the water taken preferentially during the
415     temporary water shortage emergency.
416          (b) A duty to measure under this Subsection (4) does not replace or modify any other
417     duty to measure water under this title or rules made under this title.
418          Section 10. Section 73-3d-302 is enacted to read:
419          73-3d-302. Emergency planning by a person requesting the declaration of a
420     temporary water shortage emergency.
421          A person entitled to make a request seeking a preference under Section 73-3d-301 by
422     requesting that the governor declare a temporary water shortage emergency may exercise a
423     preference under Section 73-3d-301 only if:
424          (1) (a) the person entitled to make a request adopts an emergency response plan before
425     the declaration of a temporary water shortage emergency if the person entitled to make a
426     request is a community water system, as defined in Section 19-4-102, serving a population of
427     more than 3,300; or
428          (b) the governor includes a statement in the executive order that the person entitled to

429     make a request is eligible to exercise a preference under Section 73-3d-301 notwithstanding
430     that the person entitled to make a request who is described in Subsection (1)(a)(i) has not
431     adopted an emergency response plan before the declaration of a temporary water shortage
432     emergency; or
433          (2) the person entitled to make a request is not described in Subsection (1)(a).
434          Section 11. Section 73-3d-401 is enacted to read:
Part 4. Compensation

436          73-3d-401. Definitions.
437          As used in this part:
438          (1) "Arbitration" means a private hearing before a neutral or panel of neutrals from the
439     department who hear the evidence, consider the contentions of the parties, and enters a written
440     award to resolve the issues presented.
441          (2) "Commission" means the Conservation Commission created in Section 4-18-104.
442          (3) "Consequential damages" means the losses or injuries from the exercise of a
443     preference under this chapter that result in material losses to an interrupted user and that are
444     reasonably foreseeable to someone familiar with the industry where use is being made of the
445     water at the time the preference is exercised, including:
446          (a) loss of sales or operating revenue;
447          (b) damage to equipment; or
448          (c) damage to capital facilities or operational assets.
449          (4) "Department" means the Department of Agriculture and Food.
450          (5) "Fund" means the Agriculture Resource Development Fund created in Section
451     4-18-106.
452          (6) "Interrupted user"means a person whose beneficial use of water is interrupted by
453     the preferential use of water under this chapter, and is:
454          (a) the holder or lessee of an approved application to appropriate water that is
455     interrupted;
456          (b) the record or equitable holder or lessee of a perfected water right that is interrupted;
457     or
458          (c) the owner, lessor, or lessee of a right to use water that is represented by shares of
459     stock in a mutual water company whose water rights are interrupted.

460          (7) "Mediation" means a private forum in which one or more impartial persons from
461     the department facilitate communication between the interrupted user and the preferential user
462     to promote a mutually acceptable resolution or settlement.
463          (8) "Preferential user" means a person specified in the executive order declaring a
464     temporary water shortage emergency who uses water preferentially during the temporary water
465     shortage emergency.
466          Section 12. Section 73-3d-402 is enacted to read:
467          73-3d-402. Payment of compensation.
468          (1) (a) A preferential user shall pay an interrupted user an amount equal to the total of
469     the following:
470          (i) the reasonable value of the water interrupted by the preferential use;
471          (ii) applicable crop losses;
472          (iii) other consequential damages incurred as a result of the interruption; and
473          (iv) interest on the amounts described in Subsections (1)(a)(i), (ii), and (iii) in the
474     amount of 8% per annum.
475          (b) Interest described in Subsection (1)(a)(iv) shall start the day on which the
476     preferential user first begins to take water preferentially.
477          (c) A preferential user shall pay an interrupted user the amount described in Subsection
478     (1)(a) by the later of 30 days from the day on which:
479          (i) the preferential user stops diverting water preferentially under this chapter; or
480          (ii) mediation or arbitration under Subsection (2) is complete.
481          (d) (i) Once an interrupted user informs the preferential user of the amount owed under
482     Subsection (1)(a), the preferential user has the burden of proof to prove, by a preponderance of
483     the evidence, that an amount different from that asserted by the interrupted user is owed under
484     Subsection (1)(a).
485          (ii) The burden of proof described in this Subsection (1)(d) applies throughout the
486     process of paying compensation, including during mediation, arbitration, or a court action.
487          (2) (a) (i) If the interrupted user or the preferential user requests mediation, the
488     department shall mediate a dispute over the application of this section.
489          (ii) If the interrupted user and the preferential user jointly request arbitration, the
490     department shall arbitrate a dispute over the application of this section.

491          (b) In conducting mediation under this Subsection (2), Title 78B, Chapter 10, Utah
492     Uniform Mediation Act, applies.
493          (c) (i) In conducting arbitration under this Subsection (2), the department shall follow
494     the Title 78B, Chapter 11, Utah Uniform Arbitration Act.
495          (ii) In applying Title 78B, Chapter 11, Utah Uniform Arbitration Act, the arbitrator and
496     parties shall treat the matter as if:
497          (A) the arbitration was ordered by a court; and
498          (B) the department was appointed as arbitrator by the court.
499          (iii) For the purpose of an arbitration conducted under this section, if the dispute to be
500     arbitrated is not already the subject of legal action, the district court having jurisdiction over
501     the county where the preferential use of water involved in the dispute is located is the court
502     referred to in Title 78B, Chapter 11, Utah Uniform Arbitration Act.
503          (iv) Arbitration by the department is not necessary before bringing legal action to
504     adjudicate a claim under this section. The lack of arbitration by the department does not
505     constitute, and may not be interpreted as constituting, a failure to exhaust available
506     administrative remedies or as a bar to bringing legal action.
507          (v) Arbitration under this section is not subject to Title 63G, Chapter 4, Administrative
508     Procedures Act, or Title 78B, Chapter 6, Part 2, Alternative Dispute Resolution Act.
509          (vi) Within 30 days after an arbitrator issues a final award, any party to the arbitration
510     may submit the dispute, the award, or any issue upon which the award is based, to the district
511     court for review by trial de novo unless the parties agree in advance of arbitration that the
512     arbitration is binding and that no de novo review may occur.
513          (3) (a) If the persons described in Subsection (2) participate in mediation or arbitration
514     under Subsection (2), at the conclusion of the mediation or arbitration, the preferential user
515     shall pay the interrupted user an amount equal to the lesser of:
516          (i) the amount of actual attorney fees incurred; or
517          (ii) $15,000.
518          (b) An interrupted user or preferential user may not seek mediation or arbitration by the
519     Office of the Property Rights Ombudsman under Title 13, Chapter 43, Property Rights
520     Ombudsman Act.
521          (4) In an action when the court is asked to determine the amount described in

522     Subsection (1), the court shall award costs and reasonable attorney fees:
523          (a) to the interrupted user if the preferential user declines to participate in mediation or
524     arbitration under Subsection (2);
525          (b) to the preferential user if the interrupted user declines to participate in mediation or
526     arbitration under Subsection (2);
527          (c) to the interrupted user if the amount determined by the court is 85% or more of:
528          (i) the final amount offered by the interrupted user as part of the mediation described in
529     Subsection (2)(a); or
530          (ii) the final amount determined by the department as a result of arbitration described
531     in Subsection (2); and
532          (d) to the preferential user if the amount determined by the court is less than 85% of:
533          (i) the final amount offered by the interrupted user as part of the mediation described in
534     Subsection (2)(a); or
535          (ii) the final amount determined by the department as a result of arbitration described
536     in Subsection (2).
537          (5) (a) In accordance with this Subsection (5), an interrupted user may apply for one or
538     more 0% interest loans from the commission to compensate the interrupted user while the
539     interrupted user is waiting to be compensated by the preferential user under this section.
540          (b) Before the commission may make a loan under this Subsection (5) to an interrupted
541     user, the interrupted user shall apply for the loan by:
542          (i) providing information sufficient to establish to the satisfaction of the commission:
543          (A) the basis by which the person is entitled to use of the water;
544          (B) the use of water that would have been made by the person without the interruption;
545          (C) the length of the interruption;
546          (D) a good faith estimate of the amount of water the person entitled to the use of water
547     would otherwise have made;
548          (E) the losses and consequential damages incurred as a result of the interruption; and
549          (F) whether the interrupted user has previously received a loan under this Subsection
550     (5) for the same interruption of water use;
551          (ii) agreeing in writing to repay the amount of a loan within 30 days of the day on
552     which the interrupted user is paid in full by the preferential user; and

553          (iii) providing any other information required by rules made by the department in
554     accordance with Title 63G, Chapter 3, Utah Administrative Rulemaking Act.
555          (c) (i) Once the commission obtains a complete application under Subsection (5)(b),
556     the commission shall determine whether the interrupted user is eligible for a loan and the
557     amount to be loaned using reliable third-party market and producer information, when
558     available, as close as possible to the beginning date of the water delivery interruption, except
559     that a single loan may not exceed $150,000.
560          (ii) For agriculture commodities, the commission may determine unit prices and base
561     adjustments by using:
562          (A) applicable United States Department of Agriculture crop pricing data sets;
563          (B) Utah State University Extension data sets; and
564          (C) publications, fact sheets, and enterprise budgets data sets published by a university.
565          (iii) For agriculture commodities, the commission may consider documents filed under
566     Subsection (5)(b) to establish historical production records provided by the interrupted user.
567          (iv) For nonagricultural products or services, the commission may determine the loan
568     amount using information from:
569          (A) other state agencies;
570          (B) federal agencies; and
571          (C) industry leaders within the state associated with the goods or service forgone by the
572     interrupted user.
573          (v) For nonagricultural products or services, the commission shall determine the
574     quantity of units of nonagricultural good and services during the temporary water shortage
575     emergency by using:
576          (A) industry standards, if available; or
577          (B) recent product or service records.
578          (d) The commission may issue a loan to an interrupted user only to the extent that there
579     is money in the fund and the limit on outstanding loans from the fund under Subsection
580     4-18-106(6) has not been met. The commission shall issue loans from the fund in the order that
581     an interrupted user submits a completed application for the loan.
582          (e) An interrupted user who receives a loan under this Subsection (5) shall repay the
583     amount of the loan within 30 days of the day on which the interrupted user is paid in full by the

584     preferential user.
585          (6) (a) If the department determines that the preferential user fails to comply with
586     Subsection (1), the department may bring suit in a court of competent jurisdiction to require a
587     preferential user to reimburse the fund for a loan issued under Subsection (5) that is based on
588     the use of the water by the preferential user.
589          (b) If the department determines that an interrupted user fails to repay a loan in
590     accordance with Subsection (5), the department may bring suit in a court of competent
591     jurisdiction to require repayment of the loan.
592          (c) If the department prevails in an action brought under this Subsection (6), the
593     department may recover amounts owed, court costs, and reasonable attorney fees.
594          (7) The department shall establish by rule made in accordance with Title 63G, Chapter
595     3, Utah Administrative Rulemaking Act, procedures to:
596          (a) request mediation or arbitration under this section;
597          (b) apply for a loan under Subsection (5)
598          (c) determine the amount to be loaned to an interrupted user under Subsection (5); and
599          (d) provide for the repayment of a loan issued under Subsection (5).
600          Section 13. Section 73-3d-403 is enacted to read:
601          73-3d-403. Security requirements.
602          (1) As a condition of participating in mediation or arbitration under Section 73-3d-403,
603     a person specified in the executive order declaring a temporary water shortage emergency shall
604     post with the department a corporate surety bond, irrevocable letter of credit, trust fund
605     agreement, or any other security agreement considered reasonable in an amount not less than
606     $100,000.
607          (2) The bond or other security posted shall be conditioned upon:
608          (a) the faithful performance in mediation or arbitration; and
609          (b) the payment of amounts owed under Section 73-3d-403.
610          (3) If the department determines that the conditions of Subsection (2) are not met, the
611     commissioner of the department shall bring an action upon the bond or other security.
612          Section 14. Repealer.
613          This bill repeals:
614          Section 73-3-21.3, Study of preferences during temporary water shortage

615     emergency.
616          Section 73-3-21.5, Preferences between appropriators.
617          Section 15. Appropriation.
618          The following sums of money are appropriated for the fiscal year beginning July 1,
619     2023, and ending June 30, 2024. These are additions to amounts previously appropriated for
620     fiscal year 2024. Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures
621     Act, the Legislature appropriates the following sums of money from the funds or accounts
622     indicated for the use and support of the government of the state of Utah.
623     ITEM 1
624     To Department of Agriculture and Food - Agriculture Resource Development Fund
625          From General Fund, One-time

626          Schedule of Programs:
627               Agriculture Resource Development Fund               5,000,000