Chief Sponsor: Scott D. Sandall

House Sponsor: Casey Snider


9     General Description:
10          This bill addresses the optimal use of water in the state.
11     Highlighted Provisions:
12          This bill:
13          ▸     modifies the purposes for which money in the Water Infrastructure Restricted
14     Account may be used;
15          ▸     provides for transfer of certain loan payments from the Water Resources
16     Conservation and Development Fund to the Water Infrastructure Restricted
17     Account;
18          ▸     codifies a grant program for agricultural water optimization, including:
19               •     defining terms;
20               •     creating the Agricultural Water Optimization Committee;
21               •     providing powers and duties of the committee which includes rulemaking;
22               •     directing the process by which grants are to be issued; and
23               •     providing a sunset date;
24          ▸     provides for public information and reporting regarding the grant program;
25          ▸     addresses agricultural water optimization change applications and water savings;
26          ▸     repeals provisions related to the Agricultural Water Optimization Task Force; and
27          ▸     makes technical and conforming changes.
28     Money Appropriated in this Bill:
29          This bill appropriates in fiscal year 2024:

30          ▸     to General Fund Restricted - Agricultural Water Optimization Account, as a
31     one-time appropriation:
32               •     from General Fund, One-time, $170,000,000;
33          ▸     to General Fund Restricted - Agricultural Water Optimization Account, as a
34     one-time appropriation:
35               •     from Federal Funds - American Rescue Plan, One-time, $30,000,000;
36          ▸     to Department of Agriculture and Food - Resource Conservation, as a one-time
37     appropriation:
38                •     from Agricultural Water Optimization Account, One-time, $125,000,000;
39          ▸     to Department of Natural Resources - Water Resources Conservation and
40     Development Fund, as a one-time appropriation:
41               •     From General Fund Restricted - Water Infrastructure Restricted Account,
42     One-time ($5,000,000);
43          ▸     to Department of Natural Resources - Water Resources Conservation and
44     Development Fund, as an ongoing appropriation:
45               •     From General Fund Restricted - Water Infrastructure Restricted Account,
46     $50,000,000; and
47          ▸     to Department of Natural Resources - Water Resources, as a one-time
48     appropriation:
49               •     From General Fund Restricted - Water Infrastructure Restricted Account,
50     One-time, $5,000,000.
51     Other Special Clauses:
52          This bill provides a special effective date.
53     Utah Code Sections Affected:
54     AMENDS:
55          63I-1-273, as last amended by Laws of Utah 2022, Chapters 68, 79
56          73-10-25, as last amended by Laws of Utah 1991, First Special Session, Chapter 4
57          73-10g-103, as enacted by Laws of Utah 2015, Chapter 458

58          73-10g-104, as last amended by Laws of Utah 2016, Chapter 309
59          73-10g-204, as last amended by Laws of Utah 2022, Chapter 79
60     ENACTS:
61          73-10g-203.5, Utah Code Annotated 1953
62          73-10g-205, Utah Code Annotated 1953
63          73-10g-206, Utah Code Annotated 1953
64          73-10g-207, Utah Code Annotated 1953
65          73-10g-208, Utah Code Annotated 1953
66     REPEALS:
67          73-10g-202, as last amended by Laws of Utah 2020, Fifth Special Session, Chapter 4
68          73-10g-203, as last amended by Laws of Utah 2020, Chapter 33

70     Be it enacted by the Legislature of the state of Utah:
71          Section 1. Section 63I-1-273 is amended to read:
72          63I-1-273. Repeal dates: Title 73.
73          (1) Title 73, Chapter 27, Legislative Water Development Commission, is repealed
74     January 1, 2031.
75          (2) Title 73, Chapter 10g, Part 2, Agricultural Water Optimization, is repealed July 1,
76     2028.
77          [(2) In relation to Title 73, Chapter 10g, Part 2, Agricultural Water Optimization, on
78     July 1, 2025:]
79          [(a) Section 73-10g-202 is repealed; and]
80          [(b) Section 73-10g-203 is repealed.]
81          (3) Section 73-18-3.5, which authorizes the Division of Outdoor Recreation to appoint
82     an advisory council that includes in the advisory council's duties advising on boating policies,
83     is repealed July 1, 2024.
84          (4) Title 73, Chapter 30, Great Salt Lake Advisory Council Act, is repealed July 1,
85     2027.

86          (5) In relation to Title 73, Chapter 31, Water Banking Act, on December 31, 2030:
87          (a) Subsection 73-1-4(2)(e)(xi) is repealed;
88          (b) Subsection 73-10-4(1)(h) is repealed; and
89          (c) Title 73, Chapter 31, Water Banking Act, is repealed.
90          Section 2. Section 73-10-25 is amended to read:
91          73-10-25. Contents of fund -- Investment -- Contributions.
92          (1) The Water Resources Conservation and Development Fund consists of:
93          (a) money appropriated to it by the Legislature;
94          (b) money received from the sale of project water and power, less operating and
95     maintenance costs;
96          (c) annual payments on contracts for projects constructed under Section 73-10-24 or
97     the State Water Conservation Program; and
98          (d) other money or tax revenues designated by the Legislature to be credited to the
99     Water Resources Conservation and Development Fund.
100          (2) [All money] Money deposited into the Water Resources Conservation and
101     Development Fund shall be invested by the state treasurer with interest accruing to the Water
102     Resources Conservation and Development Fund, except for payments, if any, necessary to
103     comply with Section 148(f), Internal Revenue Code of 1986.
104          (3) [Contributions] A contribution of money, property, or equipment may be received
105     from [any] a political subdivision of the state, federal agency, water users' association, or
106     person[, or corporation] for use in carrying out the purposes of Section 73-10-24.
107          (4) Notwithstanding Subsection (1), the division shall transfer a payment on a loan to
108     the Water Infrastructure Restricted Account, created in Section 73-10g-103, if the loan:
109          (a) is issued from the Water Resources Conservation and Development Fund on or
110     after July 1, 2023; and
111          (b) relates to a project described in Subsection 73-10g-104(4).
112          Section 3. Section 73-10g-103 is amended to read:
113          73-10g-103. Creation of the Water Infrastructure Restricted Account.

114          (1) (a) There is created a restricted account in the General Fund known as the "Water
115     Infrastructure Restricted Account."
116          (b) The restricted account shall earn interest.
117          (2) The restricted account consists of money generated from the following sources:
118          (a) voluntary contributions made to the division for the construction, operation, or
119     maintenance of state water projects;
120          (b) appropriations made to the [fund] restricted account by the Legislature; [and]
121          (c) interest earned on the restricted account[.]; and
122          (d) money transferred to the restricted account under Section 73-10-25.
123          (3) Subject to appropriation, the division and the board shall manage the restricted
124     account created in Subsection (1) in accordance with this chapter.
125          Section 4. Section 73-10g-104 is amended to read:
126          73-10g-104. Authorized use of the Water Infrastructure Restricted Account.
127          Money in the restricted account is to be used for:
128          (1) the development of the state's undeveloped share of the Bear and Colorado rivers,
129     pursuant to existing interstate compacts governing both rivers as described in Chapter 26, Bear
130     River Development Act, and Chapter 28, Lake Powell Pipeline Development Act;
131          (2) repair, replacement, or improvement of federal water projects for local sponsors in
132     the state [of Utah] when federal funds are not available; [and]
133          (3) study and development of rules, criteria, targets, processes, and plans, as described
134     in Subsection 73-10g-105(3)[.]; and
135          (4) a project that benefits the Colorado River drainage in Utah, including projects for
136     water reuse, desalinization, building of dams, or water conservation, if a county or municipality
137     that benefits from the project:
138          (a) requires a new residential subdivision follow the regional conservation level of .59
139     acre-feet regardless of whether the outside water is potable, reuse, or secondary water;
140          (b) adopts and implements the local water conservancy district's emergency drought
141     contingency plan;

142          (c) adopts and implements the local water conservancy district's grass rebate program's
143     maximum grass restrictions;
144          (d) prohibits grass in new retail, industrial, or commercial facility landscaping;
145          (e) has reuse water be managed by the local water conservancy district;
146          (f) does not withdraw water from an aquifer in excess of the safe yield of the aquifer as
147     defined in Section 73-5-15;
148          (g) adopts and implements excess water use surcharges;
149          (h) prohibits private water features in new development, such as a fountain, pond, or
150     ski lake; and
151          (i) prohibits large grassy areas in new development, unless the large grassy area is open
152     to the general public.
153          Section 5. Section 73-10g-203.5 is enacted to read:
154          73-10g-203.5. Definitions.
155          As used in this part:
156          (1) "Account" means the Agricultural Water Optimization Account created in Section
157     73-10g-204.
158          (2) "Agricultural water optimization" means the implementation of agricultural and
159     water management practices that maintain viable agriculture while reducing water depletion to
160     enhance water availability and minimize impacts on water supply, water quality, and the
161     environment.
162          (3) "Change application" means an application filed under Section 73-3-3.
163          (4) "Committee" means the Agricultural Water Optimization Committee created in
164     Section 73-10g-205.
165          (5) "Conservation commission" means the conservation commission created in Section
166     4-18-104.
167          (6) "Department" means the Department of Agriculture and Food.
168          (7) "Depletion reduction" means a net decrease in water consumed accomplished by
169     implementing water optimization practices during beneficial use of water under an approved

170     water right.
171          (8) "Diversion reduction" means a decrease in net diversion amount from that allowed
172     under a water right accomplished by implementation of water optimization practices.
173          (9) "Funding application" means an application filed under Section 73-10g-206.
174          (10) "Saved water" means the water quantified as depletion reduction or diversion
175     reduction in a final order approving a change application filed in conjunction with an
176     agricultural water optimization project.
177          Section 6. Section 73-10g-204 is amended to read:
178          73-10g-204. Agricultural Water Optimization Account.
179          [(1) As used in this section:]
180          [(a) "Account" means the Agricultural Water Optimization Account created in
181     Subsection (2).]
182          [(b) "Agricultural water optimization" means the implementation of agricultural and
183     water management practices that maintain or increase viable agriculture while minimizing
184     negative impacts on water supply, water quality, and the environment.]
185          [(c) "Department" means the Department of Agriculture and Food.]
186          [(2)] (1) There is created a restricted account within the General Fund called the
187     "Agricultural Water Optimization Account."
188          [(3)] (2) The account consists of:
189          (a) appropriations from the Legislature;
190          (b) federal funds; and
191          (c) grants or donations from other public or private sources.
192          [(4)] (3) Subject to appropriation, the [department] conservation commission may use
193     money in the account to issue grants in accordance with Section 73-10g-206 to improve
194     agricultural water optimization.
195          [(5)] (4) Until December 31, 2024, the department may loan up to $3,000,000 of
196     General Fund money in the account to the Agriculture Resource Development Fund, subject to
197     the conditions described in Section 4-18-106.

198          [(6)] (5) (a) The department shall maintain the [Agriculture Water Optimization
199     Account] account and record [all] the debits and credits made to the account by the department.
200          (b) The Office of the Treasurer shall deposit interest and other earnings derived from
201     investment of money in the [Agriculture Water Optimization Account] account into the
202     account.
203          (6) The department and the Department of Natural Resources may use money in the
204     account for the administration of this part, except that the aggregate amount expended under
205     this Subsection (6) may not exceed 1.5% of the money appropriated to the grant program
206     described in Section 73-10g-206.
207          Section 7. Section 73-10g-205 is enacted to read:
208          73-10g-205. Agricultural Water Optimization Committee.
209          (1) There is created in the department a committee known as the "Agricultural Water
210     Optimization Committee" that consists of:
211          (a) the commissioner of the department, or the commissioner's designee;
212          (b) the director of the division, or the director's designee;
213          (c) the director of the Division of Water Rights, or the director's designee;
214          (d) the dean of the College of Agriculture and Applied Science from Utah State
215     University, or the dean's designee;
216          (e) one individual representing local conservation districts created by Title 17D,
217     Chapter 3, Conservation District Act, appointed by the executive director of the Department of
218     Natural Resources;
219          (f) one individual representing water conservancy districts, appointed by the executive
220     director of the Department of Natural Resources; and
221          (g) three Utah residents representing the interests of the agriculture industry appointed
222     by the executive director of the Department of Natural Resources.
223          (2) (a) An individual appointed under Subsection (1) shall serve for a term of four
224     years.
225          (b) Notwithstanding the requirements of Subsection (2)(a), the executive director of the

226     Department of Natural Resources shall, at the time of appointment or reappointment, adjust the
227     length of terms to ensure that the terms of appointed members are staggered so that
228     approximately half of the appointed members are appointed every two years.
229          (3) (a) The presence of five members constitutes a quorum.
230          (b) The vote of five members constitutes the transaction of business by the committee.
231          (c) The committee shall select one of the committee's members to be chair. The
232     committee may select a member to be vice chair to act in place of the chair:
233          (i) during the absence or disability of the chair; or
234          (ii) as requested by the chair.
235          (d) The committee shall convene at the times and places prescribed by the chair.
236          (4) A member may not receive compensation or benefits for the member's service, but
237     may receive per diem and travel expenses in accordance with:
238          (a) Section 63A-3-106;
239          (b) Section 63A-3-107; and
240          (c) rules made by the Division of Finance pursuant to Sections 63A-3-106 and
241     63A-3-107.
242          (5) The department shall provide administrative support to the committee.
243          (6) The committee shall make rules, in accordance with Title 63G, Chapter 3, Utah
244     Administrative Rulemaking Act, establishing:
245          (a) eligibility requirements for a grant issued under Section 73-10g-206, except that the
246     eligibility requirements shall:
247          (i) require at least a match for grant money of 50% of the total costs;
248          (ii) consider the statewide need to distribute grant money;
249          (iii) require a grant recipient to construct or install and maintain one or more measuring
250     devices as necessary to comply with Section 73-5-4 and rules adopted by the Division of Water
251     Rights regarding installation, use, and maintenance of devices to measure water use and to
252     demonstrate water use in accordance with a project funded by a grant; and
253          (iv) require a grant recipient to report water diversion and use measurements to the

254     state engineer pursuant to Section 73-5-4 and rules made by the state engineer, in accordance
255     with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, for water measurement and
256     reporting;
257          (b) the process for applying for a grant issued under Section 73-10g-206; and
258          (c) preliminary screening criteria to be used by the department under Subsection
259     73-10g-206(2)(d).
260          (7) The committee shall, in coordination with the division:
261          (a) as of July 1, 2023, assume oversight of all remaining research and contracts of the
262     previous Agricultural Water Optimization Task Force activities;
263          (b) post research to address and account for farm economics at the enterprise and
264     community level that affects agricultural water optimization and encourage market behavior
265     that financially rewards agricultural water optimization practices;
266          (c) oversee research to identify obstacles to and constraints upon optimization of
267     agricultural water use, and to recommend management tools, technologies, and other
268     opportunities to optimize agricultural water use as measured at the basin level; and
269          (d) facilitate benefits for farmers who optimize water use and protect water quality.
270          (8) The committee shall comply with Section 73-10g-206 related to grants issued under
271     this part.
272          Section 8. Section 73-10g-206 is enacted to read:
273          73-10g-206. Agricultural water optimization grants -- Demonstration of water
274     savings.
275          (1) The conservation commission may issue a grant described in Subsection
276     73-10g-204(3) in accordance with the procedures in this section.
277          (2) (a) The committee shall establish funding application periods during which a
278     person may apply for a grant under this part.
279          (b) During a funding application period, a person may file a funding application with
280     the department for preliminary screening of eligibility to receive a grant under this part,
281     including requisite water savings.

282          (c) The department shall screen the funding applications for eligibility.
283          (d) If the department determines that an applicant meets eligibility requirements and
284     proposes water savings, the department shall provide the applicant preliminary approval.
285          (e) After receiving preliminary approval under Subsection (2)(d), the applicant shall
286     engage in a pre-filing consultation with the Division of Water Rights under Subsection
287     73-3-3(2) to determine whether a change application is required to accomplish the project
288     proposed in the funding application or to quantify saved water that may be made available for
289     beneficial use as part of the project.
290          (f) Once the Division of Water Rights determines whether the person is required to file
291     a change application, the person may complete the funding application process and file the
292     completed funding application with the committee.
293          (g) The committee shall review completed funding applications to rank the funding
294     applications and recommend to the conservation commission which applicants should receive a
295     grant under this part for the relevant funding application period.
296          (h) The conservation commission may issue a grant under this section only after receipt
297     of the recommendations of the committee.
298          (3) If the conservation commission issues a grant under this part, before the grant
299     recipient may receive the grant money, the grant recipient shall:
300          (a) enter into a contract with the department that includes:
301          (i) the expectations for the grant recipient;
302          (ii) the life expectancy of a project;
303          (iii) the process of certifying completion; and
304          (iv) design requirements;
305          (b) file any needed change application and obtain a final order from the state engineer
306     approving the change application, including any judicial review of the state engineer's order;
307     and
308          (c) demonstrate how the grant recipient shall comply with the requirements of the final
309     order approving the related change application.

310          (4) A grant recipient shall comply with the monitoring and reporting requirements
311     under the contract described in Subsection (3).
312          (5) The department shall:
313          (a) monitor the grant related activities of a grant recipient;
314          (b) certify a project funded by a grant once the project is complete;
315          (c) determine whether there are funding sources other than the account to fund the
316     grant; and
317          (d) provide information needed by the division or the Division of Water Rights to
318     fulfill the division's or the Division of Water Rights' statutory duties, including those
319     designated in this chapter.
320          (6) The department may:
321          (a) conduct outreach campaigns related to the grant program, including the program's
322     purpose and expectations for grant recipients;
323          (b) solicit funding applications and assist persons in applying for a grant under this
324     part;
325          (c) assist grant recipients in developing a project; and
326          (d) coordinate with federal agencies and the division for evaluation of funding
327     applications and for assistance with implementing projects for which funding has been
328     provided under this part.
329          (7) Grant money may be used by the department or a grant recipient for the hiring of
330     third-party consultants as appropriate to complete a project funded by grant money.
331          (8) The division, upon request from the committee, may assist with evaluation of
332     funding applications and implementation of projects funded under this part.
333          Section 9. Section 73-10g-207 is enacted to read:
334          73-10g-207. Division public information and reporting.
335          (1) The division shall, in coordination with the department and the Division of Water
336     Rights, annually compile and publish a report on:
337          (a) completed projects;

338          (b) saved water made available from agricultural water optimization projects; and
339          (c) the effectiveness of the agricultural water optimization funding programs
340     established by this part.
341          (2) On or before November 30 of each year, the committee, division, and the Division
342     of Water Rights shall jointly present the annual report to:
343          (a) the Legislative Water Development Commission;
344          (b) the Natural Resources, Agriculture, and Environment Interim Committee;
345          (c) the Utah Water Task Force within the Department of Natural Resources; and
346          (d) the Utah Watersheds Council.
347          (3) The division shall publish reports from research described in Subsection
348     73-10g-205(7).
349          Section 10. Section 73-10g-208 is enacted to read:
350          73-10g-208. Water use pursuant to a water optimization change application.
351          (1) A person entitled to file a change application under Section 73-3-3 may file a
352     change application in connection with an agricultural water optimization project, regardless of
353     whether the agricultural water optimization project is funded under this part:
354          (a) to change the nature of use of the depletion reduction amount of an agricultural
355     water right to saved water;
356          (b) to quantify saved water; and
357          (c) to allow beneficial use of saved water separate from the agricultural use, so long as
358     there is no enlargement of depletion or diversion amounts.
359          (2) Saved water, including depletion reduction and diversion reduction, is considered
360     beneficial use as required by Sections 73-1-3 and 73-3-1.
361          (3) The state engineer may make rules as provided under Section 73-2-1 and Title 63G,
362     Chapter 3, Utah Administrative Rulemaking Act, regarding implementation of this section.
363          Section 11. Repealer.
364          This bill repeals:
365          Section 73-10g-202, Agricultural Water Optimization Task Force.

366          Section 73-10g-203, Duties of the task force.
367          Section 12. Appropriation.
368          The following sums of money are appropriated for the fiscal year beginning July 1,
369     2023, and ending June 30, 2024. These are additions to amounts previously appropriated for
370     fiscal year 2024. Under the terms and conditions of Title 63J, Chapter 1, Budgetary Procedures
371     Act, the Legislature appropriates the following sums of money from the funds or accounts
372     indicated for the use and support of the government of the state of Utah.
373     ITEM 1
374     To General Fund Restricted - Agricultural Water Optimization Account
375          From General Fund, One-time

376          From Federal Funds - American Rescue Plan, One-time

377          Schedule of Programs:
378               Agricultural Water Optimization Account               200,000,000
379          The Legislature intends that funds appropriated by this item from the American Rescue
380     Plan Act may only be expended or distributed for purposes that comply with the
381     legal requirements and federal guidelines under the American Rescue Plan Act of 2021.
382     Additionally, the Legislature intends that the agency administering these funds meet all
383     compliance and reporting requirements associated with these funds, as directed by the
384     Governor's Office of Planning and Budget.
385     ITEM 2
386     To Department of Agriculture and Food - Resource Conservation
387          From Agricultural Water Optimization Account, One-time

388          Schedule of Programs:
389               Water Quantity                              125,000,000
390          The Legislature intends that the $125,000,000 one-time from the Agricultural Water
391     Optimization Account provided by this item be expended as follows:
392          (1) $25,000,000 on general water optimization;
393          (2) $25,000,000 on subsurface drip irrigation;

394          (3) $25,000,000 on surge irrigation;
395          (4) $25,000,000 on delivery, measurement, and reporting of water use data, including
396     telemetry; and
397          (5) $25,000,000 on canal improvements.
398     ITEM 3
399     To Department of Natural Resources - Water Resources Conservation and Development Fund
400          From General Fund Restricted - Water Infrastructure
401          Restricted Account, One-time

402          From General Fund Restricted - Water Infrastructure
403          Restricted Account

404          Schedule of Programs:
405               Water Resources Conservation and Development Fund     45,000,000
406          The Legislature intends that:
407          (1) the ongoing funding from the Water Infrastructure Restricted Account provided in
408     this item be expended as loans for projects that benefit the Colorado River drainage in Utah,
409     including projects for water reuse, dam construction, desalination, and other conservation
410     projects; and
411          (2) repayments of loans described in Subsection (1) be transferred to the Water
412     Infrastructure Restricted Account as outlined under Section 73-10-25.
413     ITEM 4
414     To Department of Natural Resources - Water Resources
415          From General Fund Restricted - Water Infrastructure
416          Restricted Account, One-time

417          Schedule of Programs:
418               Construction                                   5,000,000
419     The Legislature intends that the $5,000,000 provided by this item be expended as a grant for
420     construction related to the Hyrum Reservoir.
421          Section 13. Effective date.

422          This bill takes effect on July 1, 2023.