1     
STATE SETTLEMENT AGREEMENTS REQUIREMENTS

2     
2023 GENERAL SESSION

3     
STATE OF UTAH

4     
Chief Sponsor: Don L. Ipson

5     
House Sponsor: Robert M. Spendlove

6     

7     LONG TITLE
8     General Description:
9          This bill modifies provisions related to approval of settlements.
10     Highlighted Provisions:
11          This bill:
12          ▸     provides definitions;
13          ▸     requires notice of certain settlements be provided to the Legislative Management
14     Committee;
15          ▸     adjusts thresholds for executive and legislative approval of settlement agreements
16     involving the state or the state's subdivisions;
17          ▸     clarifies that final approval is contingent upon receipt of approvals of lower
18     threshold amounts;
19          ▸     requires the Legislature's general counsel to receive notice of and updates on
20     negotiation proceedings, and permits the general counsel to attend negotiations in
21     some circumstances;
22          ▸     requires notice of certain settlements to be sent to the Legislative Management
23     Committee;
24          ▸     revises language for clarity; and
25          ▸     makes technical changes.
26     Money Appropriated in this Bill:
27          None
28     Other Special Clauses:
29          None
30     Utah Code Sections Affected:
31     AMENDS:
32          63G-10-102, as last amended by Laws of Utah 2020, Chapter 365
33          63G-10-201, as renumbered and amended by Laws of Utah 2008, Chapter 382
34          63G-10-202, as renumbered and amended by Laws of Utah 2008, Chapter 382
35          63G-10-301, as renumbered and amended by Laws of Utah 2008, Chapter 382
36          63G-10-302, as renumbered and amended by Laws of Utah 2008, Chapter 382
37          63G-10-303, as renumbered and amended by Laws of Utah 2008, Chapter 382
38          63G-10-401, as renumbered and amended by Laws of Utah 2008, Chapter 382
39          63G-10-402, as enacted by Laws of Utah 2011, Chapter 361
40          63G-10-403, as last amended by Laws of Utah 2017, Chapter 348
41          63G-10-503, as last amended by Laws of Utah 2021, Chapter 63
42     

43     Be it enacted by the Legislature of the state of Utah:
44          Section 1. Section 63G-10-102 is amended to read:
45          63G-10-102. Definitions.
46          As used in this chapter:
47          (1) (a) "Action settlement agreement" includes a stipulation, consent decree, settlement
48     agreement, or any other legally binding document or representation that resolves a threatened
49     or pending lawsuit between the state and another party by requiring the state to take legally
50     binding action.
51          (b) "Action settlement agreement" includes stipulations, consent decrees, settlement
52     agreements, and other legally binding documents or representations resolving a dispute
53     between the state and another party when the state is required to pay money and required to
54     take legally binding action.
55          (c) "Action settlement agreement" does not include:
56          (i) the internal process established by the Department of Transportation to resolve
57     construction contract claims;
58          (ii) any resolution of an employment dispute or claim made by an employee of the state
59     of Utah against the state as employer;
60          (iii) adjudicative orders issued by the State Tax Commission, the Public Service
61     Commission, the Labor Commission, or the Department of Workforce Services; or
62          (iv) the settlement of disputes arising from audits, defaults, or breaches of permits,
63     contracts of sale, easements, or leases by the School and Institutional Trust Lands
64     Administration.
65          (2) (a) "Agency" means each department, commission, board, council, agency,
66     institution, officer, corporation, fund, division, office, committee, authority, laboratory, library,
67     unit, bureau, panel, or other administrative unit of the state.
68          (b) "Agency" includes the legislative branch, the judicial branch, the attorney general's
69     office, the State Board of Education, the Utah Board of Higher Education, the institutional
70     councils of each higher education institution, and each higher education institution.
71          (3) (a) "Financial settlement agreement" includes a stipulation, consent decree,
72     settlement agreement, and any other legally binding document or representation that resolves a
73     dispute between the state and another party exclusively by requiring the payment of money
74     from one party to the other.
75          (b) "Financial settlement agreement" does not include:
76          (i) agreements made under the internal process established by the Department of
77     Transportation to resolve construction contract claims;
78          (ii) adjudicative orders issued by the State Tax Commission, Public Service
79     Commission, Labor Commission, or the Department of Workforce Services;
80          (iii) the settlement of disputes arising from audits, defaults, or breaches of permits,
81     contracts of sale, easements, or leases by the School and Institutional Trust Lands
82     Administration; or
83          (iv) agreements made under the internal processes established by the Division of
84     Facilities Construction and Management or by law to resolve construction contract claims
85     made against the state by contractors or subcontractors.
86          (4) "Government entities" means the state and its political subdivisions.
87          (5) "Settlement agreement report" means a report that:
88          (a) states the total amount of the settlement;
89          (b) states the payer of the settlement;
90          (c) states the recipient of the payment;
91          (d) summarizes the circumstances related to the settlement; and
92          (e) contains a copy of the settlement agreement, unless the agreement is not permitted
93     to be disclosed due to a court order or other legal requirement.
94          Section 2. Section 63G-10-201 is amended to read:
95          63G-10-201. Governor to approve financial settlement agreements.
96          (1) Before legally binding the state by executing a financial settlement agreement that
97     might cost government entities more than [$100,000] $250,000 to implement, an agency shall
98     submit the proposed financial settlement agreement to the governor for the governor's approval
99     or rejection.
100          (2) The governor shall approve or reject each financial settlement agreement.
101          (3) (a) If the governor approves the financial settlement agreement, the agency may
102     execute the agreement.
103          (b) If the governor rejects the financial settlement agreement, the agency may not
104     execute the agreement.
105          (4) If an agency executes a financial settlement agreement without obtaining the
106     governor's approval under this section, the governor may issue an executive order declaring the
107     settlement agreement void.
108          (5) An agency executing an agreement under this section shall give notice of the
109     settlement to the Legislative Management Committee by sending a settlement agreement report
110     to the president of the Senate, the speaker of the House of Representatives, and the director of
111     the Office of Legislative Research and General Counsel within three business days of executing
112     the agreement.
113          Section 3. Section 63G-10-202 is amended to read:
114          63G-10-202. Legislative review and approval of financial settlement agreements.
115          (1) (a) Before legally binding the state by executing a financial settlement agreement
116     that might cost government entities more than [$500,000] $1,000,000 to implement, an agency
117     shall:
118          (i) submit the proposed financial settlement agreement to the governor for the
119     governor's approval or rejection as required by Section 63G-10-201; and
120          (ii) if the governor approves the financial settlement agreement, submit the financial
121     settlement agreement to the Legislative Management Committee for its review and
122     recommendations.
123          (b) The Legislative Management Committee shall review the financial settlement
124     agreement and may:
125          (i) recommend that the agency execute the financial settlement agreement;
126          (ii) recommend that the agency reject the financial settlement agreement; or
127          (iii) recommend to the governor that the governor call a special session of the
128     Legislature to review and approve or reject the financial settlement agreement.
129          (2) (a) Before legally binding the state by executing a financial settlement agreement
130     that might cost government entities more than [$1,000,000] $2,000,000 to implement, an
131     agency shall:
132          (i) upon initiation of negotiations that an agency reasonably believes to have the
133     potential to lead to a settlement agreement:
134          (A) notify the Legislature's general counsel that negotiations have commenced;
135          (B) continue to keep the Legislature's general counsel informed of material
136     developments in the negotiation process; and
137          (C) permit the Legislature's general counsel to attend the negotiations;
138          (ii) submit the proposed financial settlement agreement to the governor for the
139     governor's approval or rejection as required by Section 63G-10-201; and
140          [(ii)] (iii) if the governor approves the financial settlement agreement, submit the
141     financial settlement agreement to the Legislature for its approval in an annual general session
142     or a special session.
143          (b) (i) If the Legislature approves the financial settlement agreement, the agency may
144     execute the agreement.
145          (ii) If the Legislature rejects the financial settlement agreement, the agency may not
146     execute the agreement.
147          (c) If an agency executes a financial settlement agreement without obtaining the
148     Legislature's approval under this Subsection (2):
149          (i) the governor may issue an executive order declaring the settlement agreement void;
150     or
151          (ii) the Legislature may pass a joint resolution declaring the settlement agreement void.
152          Section 4. Section 63G-10-301 is amended to read:
153          63G-10-301. Cost evaluation of action settlement agreements.
154          (1) Before legally binding the state to an action settlement agreement that might cost
155     the state a total of [$100,000] $250,000 or more to implement, an agency shall estimate the
156     cost of implementing the action settlement agreement and submit that cost estimate to the
157     governor and the Legislative Management Committee.
158          (2) The Legislative Management Committee may:
159          (a) direct its staff to make an independent cost estimate of the cost of implementing the
160     action settlement agreement; and
161          (b) affirmatively adopt a cost estimate as the benchmark for determining which
162     authorizations established by this part are necessary.
163          Section 5. Section 63G-10-302 is amended to read:
164          63G-10-302. Governor to approve action settlement agreements.
165          (1) Before legally binding the state by executing an action settlement agreement that
166     might cost government entities more than [$100,000] $250,000 to implement, an agency shall
167     submit the proposed settlement agreement to the governor for the governor's approval or
168     rejection.
169          (2) The governor shall approve or reject each action settlement agreement.
170          (3) (a) If the governor approves the action settlement agreement, the agency may
171     execute the agreement.
172          (b) If the governor rejects the action settlement agreement, the agency may not execute
173     the agreement.
174          (4) If an agency executes an action settlement agreement without obtaining the
175     governor's approval under this section, the governor may issue an executive order declaring the
176     settlement agreement void.
177          (5) An agency executing an agreement under this section shall give notice of the
178     settlement to the Legislative Management Committee by sending a settlement agreement report
179     to the president of the Senate, the speaker of the House of Representatives, and the director of
180     the Office of Legislative Research and General Counsel within three business days of executing
181     the agreement.
182          Section 6. Section 63G-10-303 is amended to read:
183          63G-10-303. Legislative review and approval of action settlement agreements.
184          (1) (a) Before legally binding the state by executing an action settlement agreement that
185     might cost government entities more than [$500,000] $1,000,000 to implement, an agency
186     shall:
187          (i) submit the proposed action settlement agreement to the governor for the governor's
188     approval or rejection as required by Section 63G-10-302; and
189          (ii) if the governor approves the action settlement agreement, submit the action
190     settlement agreement to the Legislative Management Committee for its review and
191     recommendations.
192          (b) The Legislative Management Committee shall review the action settlement
193     agreement and may:
194          (i) recommend that the agency execute the settlement agreement;
195          (ii) recommend that the agency reject the settlement agreement; or
196          (iii) recommend to the governor that the governor call a special session of the
197     Legislature to review and approve or reject the settlement agreement.
198          (2) (a) Before legally binding the state by executing an action settlement agreement that
199     might cost government entities more than [$1,000,000] $2,000,000 to implement, an agency
200     shall:
201          (i) submit the proposed action settlement agreement to the governor for the governor's
202     approval or rejection as required by Section 63G-10-302; and
203          (ii) if the governor approves the action settlement agreement, submit the action
204     settlement agreement to the Legislature for its approval in an annual general session or a
205     special session.
206          (b) (i) If the Legislature approves the action settlement agreement, the agency may
207     execute the agreement.
208          (ii) If the Legislature rejects the action settlement agreement, the agency may not
209     execute the agreement.
210          (c) If an agency executes an action settlement agreement without obtaining the
211     Legislature's approval under this Subsection (2):
212          (i) the governor may issue an executive order declaring the action settlement agreement
213     void; or
214          (ii) the Legislature may pass a joint resolution declaring the action settlement
215     agreement void.
216          Section 7. Section 63G-10-401 is amended to read:
217          63G-10-401. Condemnation, inverse condemnation settlements involving the
218     Department of Transportation.
219          (1) Notwithstanding the provisions of this chapter, the Department of Transportation
220     need not obtain the approval of the governor or the Legislature for financial or action
221     settlement agreements that resolve condemnation or inverse condemnation cases.
222          (2) Financial settlement agreements involving condemnation or inverse condemnation
223     cases for $1,000,000 to $2,000,000 over the Department of Transportation's original appraisal
224     shall be presented to the Transportation Commission for approval or rejection.
225          (3) (a) Financial settlement agreements involving condemnation or inverse
226     condemnation cases for more than $2,000,000 over the Department of Transportation's original
227     appraisal and all action settlement agreements that resolve condemnation or inverse
228     condemnation cases shall be presented:
229          (i) to the Transportation Commission for approval or rejection; and
230          (ii) if the financial or action settlement agreement is approved by the Transportation
231     Commission, to the Legislative Management Committee.
232          (b) The Legislative Management Committee may recommend approval or rejection of
233     the financial or action settlement agreement.
234          (4) (a) The Department of Transportation may not enter into a financial settlement
235     agreement that resolves a condemnation or inverse condemnation case and requires payment of
236     $1,000,000 to $2,000,000 over the Department of Transportation's original appraisal until the
237     Transportation Commission has approved the agreement.
238          (b) The Department of Transportation may not enter into a financial settlement
239     agreement that resolves a condemnation or inverse condemnation case and requires payment of
240     more than $2,000,000 over the Department of Transportation's original appraisal or enter into
241     an action settlement agreement that resolves a condemnation or inverse condemnation case
242     until:
243          (i) the Transportation Commission has approved the agreement; and
244          (ii) the Legislative Management Committee has reviewed the agreement.
245          (5) The Department of Transportation shall, for each settlement agreement approved
246     under this section for an amount greater than $1,000,000 but less than $2,000,000, give notice
247     to the Legislative Management Committee by sending a settlement agreement report to the
248     president of the Senate, the speaker of the House of Representatives, and the director of the
249     Office of Legislative Research and General Counsel within three business days of executing the
250     agreement.
251          Section 8. Section 63G-10-402 is amended to read:
252          63G-10-402. Department of Transportation construction contract claim
253     settlement agreement approval and review.
254          (1) As used in this section:
255          (a) "Claims review board" means a committee established by the department to hear
256     unresolved claims and make recommendations for settlement to the deputy director of the
257     department.
258          (b) "Department" means the Department of Transportation created in Section 72-1-201.
259          (c) "Settlement agreement" includes stipulations, consent decrees, settlement
260     agreements, or other legally binding documents or representations resolving a dispute between
261     the department and another party when the department is required to pay money or required to
262     take legally binding action.
263          (2) The department shall obtain the approval of the Transportation Commission or the
264     governor or review by the Legislative Management Committee of a settlement agreement that
265     involves a construction contract claim in accordance with this section.
266          (3) A construction contract claim settlement agreement that is being recommended by
267     the department's claims review board that might cost government entities more than [$100,000]
268     $250,000 to implement shall be presented to the Transportation Commission for approval or
269     rejection.
270          (4) A construction contract claim settlement agreement that is being recommended by
271     the department's claims review board that might cost government entities more than [$500,000]
272     $1,000,000 to implement shall be presented:
273          (a) to the Transportation Commission for approval or rejection; and
274          (b) to the governor for approval or rejection.
275          (5) (a) A construction contract claim settlement agreement that is being recommended
276     by the department's claims review board that might cost government entities more than
277     [$1,000,000] $2,000,000 to implement shall be presented:
278          (i) to the Transportation Commission for approval or rejection;
279          (ii) to the governor for approval or rejection; and
280          (iii) if the construction contract claim settlement agreement is approved by the
281     Transportation Commission and the governor, to the Legislative Management Committee.
282          (b) The Legislative Management Committee may recommend approval or rejection of
283     the construction contract claim settlement agreement.
284          (6) (a) The department may not enter into a construction contract claim settlement
285     agreement that is being recommended by the department's claims review board that might cost
286     government entities more than [$100,000] $250,000 to implement until the Transportation
287     Commission has approved the agreement.
288          (b) The department may not enter into a construction contract claim settlement
289     agreement that is being recommended by the department's claims review board that might cost
290     government entities more than [$500,000] $1,000,000 to implement until the Transportation
291     Commission and the governor have approved the agreement.
292          (c) The department may not enter into a construction contract claim settlement
293     agreement that is being recommended by the department's claims review board that might cost
294     government entities more than [$1,000,000] $2,000,000 to implement until:
295          (i) the Transportation Commission has approved the agreement;
296          (ii) the governor has approved the agreement; and
297          (iii) the Legislative Management Committee has reviewed the agreement.
298          (7) The department shall, for each settlement agreement approved under this section
299     for an amount greater than $250,000 but less than $2,000,000, give notice to the Legislative
300     Management Committee by sending a settlement agreement report to the president of the
301     Senate, the speaker of the House of Representatives, and the director of the Office of
302     Legislative Research and General Counsel within three business days of executing the
303     agreement.
304          Section 9. Section 63G-10-403 is amended to read:
305          63G-10-403. Department of Transportation bid or request for proposals protest
306     settlement agreement approval and review.
307          (1) As used in this section:
308          (a) "Department" means the Department of Transportation created in Section 72-1-201.
309          (b) "Settlement agreement" includes stipulations, consent decrees, settlement
310     agreements, or other legally binding documents or representations resolving a dispute between
311     the department and another party when the department is required to pay money or required to
312     take legally binding action.
313          (2) The department shall obtain the approval of the Transportation Commission or the
314     governor or review by the Legislative Management Committee of a settlement agreement that
315     involves a bid or request for proposal protest in accordance with this section.
316          (3) A settlement agreement that is being settled by the department as part of a bid or
317     request for proposal protest, in accordance with Subsection 63G-6a-1602(8), that might cost
318     government entities more than [$100,000] $250,000 to implement shall be presented to the
319     Transportation Commission for approval or rejection.
320          (4) A settlement agreement that is being settled by the department as part of a bid or
321     request for proposal protest, in accordance with Subsection 63G-6a-1602(8), that might cost
322     government entities more than [$500,000] $1,000,000 to implement shall be presented:
323          (a) to the Transportation Commission for approval or rejection; and
324          (b) to the governor for approval or rejection.
325          (5) (a) A settlement agreement that is being settled by the department as part of a bid or
326     request for proposal protest, in accordance with Subsection 63G-6a-1602(8), that might cost
327     government entities more than [$1,000,000] $2,000,000 to implement shall be presented:
328          (i) to the Transportation Commission for approval or rejection;
329          (ii) to the governor for approval or rejection; and
330          (iii) if the settlement agreement is approved by the Transportation Commission and the
331     governor, to the Legislative Management Committee.
332          (b) The Legislative Management Committee may recommend approval or rejection of
333     the settlement agreement.
334          (6) (a) The department may not enter into a settlement agreement that resolves a bid or
335     request for proposal protest, in accordance with Subsection 63G-6a-1602(8), that might cost
336     government entities more than [$100,000] $250,000 to implement until the Transportation
337     Commission has approved the agreement.
338          (b) The department may not enter into a settlement agreement that resolves a bid or
339     request for proposal protest, in accordance with Subsection 63G-6a-1602(8), that might cost
340     government entities more than [$500,000] $1,000,000 to implement until the Transportation
341     Commission and the governor have approved the agreement.
342          (c) The department may not enter into a settlement agreement that resolves a bid or
343     request for proposal protest, in accordance with Subsection 63G-6a-1602(8), that might cost
344     government entities more than [$1,000,000] $2,000,000 to implement until:
345          (i) the Transportation Commission has approved the agreement;
346          (ii) the governor has approved the agreement; and
347          (iii) the Legislative Management Committee has reviewed the agreement.
348          (7) The department shall, for each settlement agreement approved under this section
349     for an amount greater than $250,000 but less than $2,000,000, give notice to the Legislative
350     Management Committee by sending a settlement agreement report to the president of the
351     Senate, the speaker of the House of Representatives, and the director of the Office of
352     Legislative Research and General Counsel within three business days of executing the
353     agreement.
354          Section 10. Section 63G-10-503 is amended to read:
355          63G-10-503. Risk manager's authority to settle a claim -- Additional approvals
356     required.
357          (1) The risk manager may compromise and settle any claim for which the risk
358     management fund may be liable:
359          (a) if the settlement amount is $500,000 or less, on the risk manager's own authority[,
360     if the settlement amount is $100,000 or less];
361          (b) if the settlement amount is more than $500,000 but not more than $1,000,000, upon
362     the approval of the attorney general, or the attorney general's representative, and the executive
363     director[, if the settlement amount is more than $100,000 but not more than $250,000];
364          (c) if the settlement amount is more than $1,000,000 but not more than $1,500,000,
365     upon the governor's approval[, if the settlement amount is more than $250,000 but not more
366     than $500,000] after receiving approval under Subsection (1)(b);
367          (d) if the settlement amount is more than $1,500,000 but not more than $2,000,000,
368     upon the Legislative Management Committee's approval[, if the settlement amount is more
369     than $500,000 but not more than $1,000,000] after receiving approval under Subsections (1)(b)
370     and (c); and
371          (e) if the settlement amount is more than $2,000,000, upon the Legislature's approval[,
372     if the settlement amount is more than $1,000,000.] after receiving approval under Subsections
373     (1)(b), (c), and (d).
374          (2) (a) The risk manager shall[: (i) as soon as reasonably possible after negotiations
375     begin, notify legislative general counsel of], upon initiation of negotiations that the risk
376     manager reasonably believes to have the potential to lead to a settlement requiring approval
377     under Subsection (1)(d) or (e)[; and]:
378          (i) notify the Legislature's general counsel that negotiations have commenced;
379          (ii) continue to keep [legislative] the Legislature's general counsel informed of material
380     developments in the negotiation process[.]; and
381          (iii) permit the Legislature's general counsel to attend negotiations.
382          (b) The information that the risk manager shall provide to [legislative] the Legislature's
383     general counsel under Subsection (2)(a) includes:
384          (i) the nature of the claim that is the subject of the settlement negotiations;
385          (ii) the known facts that support the claim and the known facts that controvert the
386     claim; and
387          (iii) the risk manager's assessment of the potential liability under the claim.
388          (c) A document, paper, electronic data, communication, or other material that the risk
389     manager provides to legislative general counsel in the discharge of the risk manager's
390     responsibility under Subsection (2) may not be considered to be a record, as defined in Section
391     63G-2-103.
392          (d) Information provided by the risk manager to legislative general counsel under
393     Subsection (2)(a) and a communication between the risk manager and legislative general
394     counsel under Subsection (2)(a) shall be considered to be evidence that is subject to Rule 408
395     of the Utah Rules of Evidence to the fullest extent possible.
396          (e) Subsections (2)(c) and (d) apply regardless of whether:
397          (i) the risk manager acts personally under this section or through counsel or another
398     individual acting under the risk manager's direction; or
399          (ii) other individuals under the direction of legislative general counsel are involved in
400     the process described in this section.
401          (3) The risk manager shall, for each settlement agreement approved under this section
402     for an amount greater than $250,000 but less than $1,500,000, give notice of the settlement to
403     the Legislative Management Committee by sending a settlement agreement report to the
404     president of the Senate, the speaker of the House of Representatives, and the director of the
405     Office of Legislative Research and General Counsel within three business days of executing the
406     agreement.