Senator Scott D. Sandall proposes the following substitute bill:





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:
48               •     From General Fund Restricted - Water Infrastructure Restricted Account,
49     One-time, $5,000,000.
50     Other Special Clauses:
51          This bill provides a special effective date.
52     Utah Code Sections Affected:
53     AMENDS:
54          63I-1-273, as last amended by Laws of Utah 2022, Chapters 68, 79
55          73-10-25, as last amended by Laws of Utah 1991, First Special Session, Chapter 4
56          73-10g-103, as enacted by Laws of Utah 2015, Chapter 458

57          73-10g-104, as last amended by Laws of Utah 2016, Chapter 309
58          73-10g-204, as last amended by Laws of Utah 2022, Chapter 79
59     ENACTS:
60          73-10g-203.5, Utah Code Annotated 1953
61          73-10g-205, Utah Code Annotated 1953
62          73-10g-206, Utah Code Annotated 1953
63          73-10g-207, Utah Code Annotated 1953
64          73-10g-208, Utah Code Annotated 1953
65     REPEALS:
66          73-10g-202, as last amended by Laws of Utah 2020, Fifth Special Session, Chapter 4
67          73-10g-203, as last amended by Laws of Utah 2020, Chapter 33

69     Be it enacted by the Legislature of the state of Utah:
70          Section 1. Section 63I-1-273 is amended to read:
71          63I-1-273. Repeal dates: Title 73.
72          (1) Title 73, Chapter 27, Legislative Water Development Commission, is repealed
73     January 1, 2031.
74          (2) Title 73, Chapter 10g, Part 2, Agricultural Water Optimization, is repealed July 1,
75     2028.
76          [(2) In relation to Title 73, Chapter 10g, Part 2, Agricultural Water Optimization, on
77     July 1, 2025:]
78          [(a) Section 73-10g-202 is repealed; and]
79          [(b) Section 73-10g-203 is repealed.]
80          (3) Section 73-18-3.5, which authorizes the Division of Outdoor Recreation to appoint
81     an advisory council that includes in the advisory council's duties advising on boating policies,
82     is repealed July 1, 2024.
83          (4) Title 73, Chapter 30, Great Salt Lake Advisory Council Act, is repealed July 1,
84     2027.
85          (5) In relation to Title 73, Chapter 31, Water Banking Act, on December 31, 2030:
86          (a) Subsection 73-1-4(2)(e)(xi) is repealed;
87          (b) Subsection 73-10-4(1)(h) is repealed; and

88          (c) Title 73, Chapter 31, Water Banking Act, is repealed.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

119          (b) appropriations made to the [fund] restricted account by the Legislature; [and]
120          (c) interest earned on the restricted account[.]; and
121          (d) money transferred to the restricted account under Section 73-10-25.
122          (3) Subject to appropriation, the division and the board shall manage the restricted
123     account created in Subsection (1) in accordance with this chapter.
124          Section 4. Section 73-10g-104 is amended to read:
125          73-10g-104. Authorized use of the Water Infrastructure Restricted Account.
126          Money in the restricted account is to be used for:
127          (1) the development of the state's undeveloped share of the Bear and Colorado rivers,
128     pursuant to existing interstate compacts governing both rivers as described in Chapter 26, Bear
129     River Development Act, and Chapter 28, Lake Powell Pipeline Development Act;
130          (2) repair, replacement, or improvement of federal water projects for local sponsors in
131     the state [of Utah] when federal funds are not available; [and]
132          (3) study and development of rules, criteria, targets, processes, and plans, as described
133     in Subsection 73-10g-105(3)[.]; and
134          (4) a project that benefits the Colorado River drainage in Utah, including projects for
135     water reuse, desalinization, building of dams, or water conservation, if a county or municipality
136     that benefits from the project:
137          (a) requires a new residential subdivision follow the regional conservation level of .59
138     acre-feet regardless of whether the outside water is potable, reuse, or secondary water;
139          (b) adopts and implements the local water conservancy district's emergency drought
140     contingency plan;
141          (c) adopts and implements the local water conservancy district's grass rebate program's
142     maximum grass restrictions;
143          (d) prohibits grass in new retail, industrial, or commercial facility landscaping;
144          (e) has reuse water be managed by the local water conservancy district;
145          (f) does not withdraw water from an aquifer in excess of the safe yield of the aquifer as
146     defined in Section 73-5-15;
147          (g) adopts and implements excess water use surcharges;
148          (h) prohibits private water features in new development, such as a fountain, pond, or
149     ski lake; and

150          (i) prohibits large grassy areas in new development, unless the large grassy area is open
151     to the general public.
152          Section 5. Section 73-10g-203.5 is enacted to read:
153          73-10g-203.5. Definitions.
154          As used in this part:
155          (1) "Account" means the Agricultural Water Optimization Account created in Section
156     73-10g-204.
157          (2) "Agricultural water optimization" means the implementation of agricultural and
158     water management practices that maintain viable agriculture while reducing water depletion to
159     enhance water availability and minimize impacts on water supply, water quality, and the
160     environment.
161          (3) "Change application" means an application filed under Section 73-3-3.
162          (4) "Committee" means the Agricultural Water Optimization Committee created in
163     Section 73-10g-205.
164          (5) "Conservation commission" means the conservation commission created in Section
165     4-18-104.
166          (6) "Department" means the Department of Agriculture and Food.
167          (7) "Depletion reduction" means a net decrease in water consumed accomplished by
168     implementing water optimization practices during beneficial use of water under an approved
169     water right.
170          (8) "Diversion reduction" means a decrease in net diversion amount from that allowed
171     under a water right accomplished by implementation of water optimization practices.
172          (9) "Funding application" means an application filed under Section 73-10g-206.
173          (10) "Saved water" means the water quantified as depletion reduction or diversion
174     reduction in a final order approving a change application filed in conjunction with an
175     agricultural water optimization project.
176          Section 6. Section 73-10g-204 is amended to read:
177          73-10g-204. Agricultural Water Optimization Account.
178          [(1) As used in this section:]
179          [(a) "Account" means the Agricultural Water Optimization Account created in
180     Subsection (2).]

181          [(b) "Agricultural water optimization" means the implementation of agricultural and
182     water management practices that maintain or increase viable agriculture while minimizing
183     negative impacts on water supply, water quality, and the environment.]
184          [(c) "Department" means the Department of Agriculture and Food.]
185          [(2)] (1) There is created a restricted account within the General Fund called the
186     "Agricultural Water Optimization Account."
187          [(3)] (2) The account consists of:
188          (a) appropriations from the Legislature;
189          (b) federal funds; and
190          (c) grants or donations from other public or private sources.
191          [(4)] (3) Subject to appropriation, the [department] conservation commission may use
192     money in the account to issue grants in accordance with Section 73-10g-206 to improve
193     agricultural water optimization.
194          [(5)] (4) Until December 31, 2024, the department may loan up to $3,000,000 of
195     General Fund money in the account to the Agriculture Resource Development Fund, subject to
196     the conditions described in Section 4-18-106.
197          [(6)] (5) (a) The department shall maintain the [Agriculture Water Optimization
198     Account] account and record [all] the debits and credits made to the account by the department.
199          (b) The Office of the Treasurer shall deposit interest and other earnings derived from
200     investment of money in the [Agriculture Water Optimization Account] account into the
201     account.
202          (6) The department and the Department of Natural Resources may use money in the
203     account for the administration of this part, except that the aggregate amount expended under
204     this Subsection (6) may not exceed 1.5% of the money appropriated to the grant program
205     described in Section 73-10g-206.
206          Section 7. Section 73-10g-205 is enacted to read:
207          73-10g-205. Agricultural Water Optimization Committee.
208          (1) There is created in the department a committee known as the "Agricultural Water
209     Optimization Committee" that consists of:
210          (a) the commissioner of the department, or the commissioner's designee;
211          (b) the director of the division, or the director's designee;

212          (c) the director of the Division of Water Rights, or the director's designee;
213          (d) the dean of the College of Agriculture and Applied Science from Utah State
214     University, or the dean's designee;
215          (e) one individual representing local conservation districts created by Title 17D,
216     Chapter 3, Conservation District Act, appointed by the executive director of the Department of
217     Natural Resources;
218          (f) one individual representing water conservancy districts, appointed by the executive
219     director of the Department of Natural Resources; and
220          (g) three Utah residents representing the interests of the agriculture industry appointed
221     by the executive director of the Department of Natural Resources.
222          (2) (a) An individual appointed under Subsection (1) shall serve for a term of four
223     years.
224          (b) Notwithstanding the requirements of Subsection (2)(a), the executive director of the
225     Department of Natural Resources shall, at the time of appointment or reappointment, adjust the
226     length of terms to ensure that the terms of appointed members are staggered so that
227     approximately half of the appointed members are appointed every two years.
228          (3) (a) The presence of five members constitutes a quorum.
229          (b) The vote of five members constitutes the transaction of business by the committee.
230          (c) The committee shall select one of the committee's members to be chair. The
231     committee may select a member to be vice chair to act in place of the chair:
232          (i) during the absence or disability of the chair; or
233          (ii) as requested by the chair.
234          (d) The committee shall convene at the times and places prescribed by the chair.
235          (4) A member may not receive compensation or benefits for the member's service, but
236     may receive per diem and travel expenses in accordance with:
237          (a) Section 63A-3-106;
238          (b) Section 63A-3-107; and
239          (c) rules made by the Division of Finance pursuant to Sections 63A-3-106 and
240     63A-3-107.
241          (5) The department shall provide administrative support to the committee.
242          (6) The committee shall make rules, in accordance with Title 63G, Chapter 3, Utah

243     Administrative Rulemaking Act, establishing:
244          (a) eligibility requirements for a grant issued under Section 73-10g-206, except that the
245     eligibility requirements shall:
246          (i) require at least a match for grant money of 50% of the total costs;
247          (ii) consider the statewide need to distribute grant money;
248          (iii) require a grant recipient to construct or install and maintain one or more measuring
249     devices as necessary to comply with Section 73-5-4 and rules adopted by the Division of Water
250     Rights regarding installation, use, and maintenance of devices to measure water use and to
251     demonstrate water use in accordance with a project funded by a grant; and
252          (iv) require a grant recipient to report water diversion and use measurements to the
253     state engineer pursuant to Section 73-5-4 and rules made by the state engineer, in accordance
254     with Title 63G, Chapter 3, Utah Administrative Rulemaking Act, for water measurement and
255     reporting;
256          (b) the process for applying for a grant issued under Section 73-10g-206; and
257          (c) preliminary screening criteria to be used by the department under Subsection
258     73-10g-206(2)(d).
259          (7) The committee shall, in coordination with the division:
260          (a) as of July 1, 2023, assume oversight of all remaining research and contracts of the
261     previous Agricultural Water Optimization Task Force activities;
262          (b) post research to address and account for farm economics at the enterprise and
263     community level that affects agricultural water optimization and encourage market behavior
264     that financially rewards agricultural water optimization practices;
265          (c) oversee research to identify obstacles to and constraints upon optimization of
266     agricultural water use, and to recommend management tools, technologies, and other
267     opportunities to optimize agricultural water use as measured at the basin level; and
268          (d) facilitate benefits for farmers who optimize water use and protect water quality.
269          (8) The committee shall comply with Section 73-10g-206 related to grants issued under
270     this part.
271          Section 8. Section 73-10g-206 is enacted to read:
272          73-10g-206. Agricultural water optimization grants -- Demonstration of water
273     savings.

274          (1) The conservation commission may issue a grant described in Subsection
275     73-10g-204(3) in accordance with the procedures in this section.
276          (2) (a) The committee shall establish funding application periods during which a
277     person may apply for a grant under this part.
278          (b) During a funding application period, a person may file a funding application with
279     the department for preliminary screening of eligibility to receive a grant under this part,
280     including requisite water savings.
281          (c) The department shall screen the funding applications for eligibility.
282          (d) If the department determines that an applicant meets eligibility requirements and
283     proposes water savings, the department shall provide the applicant preliminary approval.
284          (e) After receiving preliminary approval under Subsection (2)(d), the applicant shall
285     engage in a pre-filing consultation with the Division of Water Rights under Subsection
286     73-3-3(2) to determine whether a change application is required to accomplish the project
287     proposed in the funding application or to quantify saved water that may be made available for
288     beneficial use as part of the project.
289          (f) Once the Division of Water Rights determines whether the person is required to file
290     a change application, the person may complete the funding application process and file the
291     completed funding application with the committee.
292          (g) The committee shall review completed funding applications to rank the funding
293     applications and recommend to the conservation commission which applicants should receive a
294     grant under this part for the relevant funding application period.
295          (h) The conservation commission may issue a grant under this section only after receipt
296     of the recommendations of the committee.
297          (3) If the conservation commission issues a grant under this part, before the grant
298     recipient may receive the grant money, the grant recipient shall:
299          (a) enter into a contract with the department that includes:
300          (i) the expectations for the grant recipient;
301          (ii) the life expectancy of a project;
302          (iii) the process of certifying completion; and
303          (iv) design requirements;
304          (b) file any needed change application and obtain a final order from the state engineer

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

336          (a) completed projects;
337          (b) saved water made available from agricultural water optimization projects; and
338          (c) the effectiveness of the agricultural water optimization funding programs
339     established by this part.
340          (2) On or before November 30 of each year, the committee, division, and the Division
341     of Water Rights shall jointly present the annual report to:
342          (a) the Legislative Water Development Commission;
343          (b) the Natural Resources, Agriculture, and Environment Interim Committee;
344          (c) the Utah Water Task Force within the Department of Natural Resources; and
345          (d) the Utah Watersheds Council.
346          (3) The division shall publish reports from research described in Subsection
347     73-10g-205(7).
348          Section 10. Section 73-10g-208 is enacted to read:
349          73-10g-208. Water use pursuant to a water optimization change application.
350          (1) A person entitled to file a change application under Section 73-3-3 may file a
351     change application in connection with an agricultural water optimization project, regardless of
352     whether the agricultural water optimization project is funded under this part:
353          (a) to change the nature of use of the depletion reduction amount of an agricultural
354     water right to saved water;
355          (b) to quantify saved water; and
356          (c) to allow beneficial use of saved water separate from the agricultural use, so long as
357     there is no enlargement of depletion or diversion amounts.
358          (2) Saved water, including depletion reduction and diversion reduction, is considered
359     beneficial use as required by Sections 73-1-3 and 73-3-1.
360          (3) The state engineer may make rules as provided under Section 73-2-1 and Title 63G,
361     Chapter 3, Utah Administrative Rulemaking Act, regarding implementation of this section.
362          Section 11. Repealer.
363          This bill repeals:
364          Section 73-10g-202, Agricultural Water Optimization Task Force.
365          Section 73-10g-203, Duties of the task force.
366          Section 12. Appropriation.

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

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

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

387          Schedule of Programs:
388               Water Quantity                              125,000,000
389          The Legislature intends that the $125,000,000 one-time from the Agricultural Water
390     Optimization Account provided by this item be expended as follows:
391          (1) $25,000,000 on general water optimization;
392          (2) $25,000,000 on subsurface drip irrigation;
393          (3) $25,000,000 on surge irrigation;
394          (4) $25,000,000 on delivery, measurement, and reporting of water use data, including
395     telemetry; and
396          (5) $25,000,000 on canal improvements.
397     ITEM 3

398     To Department of Natural Resources - Water Resources Conservation and Development Fund
399          From General Fund Restricted - Water Infrastructure
400          Restricted Account, One-time

401          From General Fund Restricted - Water Infrastructure
402          Restricted Account

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

416          Schedule of Programs:
417               Construction                                   5,000,000
418     The Legislature intends that the $5,000,000 provided by this item be expended as a grant for
419     construction related to the Hyrum Reservoir.
420          Section 13. Effective date.
421          This bill takes effect on July 1, 2023.