Rep. Norm Thurston — Voting Record

Bill

Number

S.B. 39 (2024GS)

Sponsor

Sen. Sandall, S.

Final action

Governor Signed 2/13/2024

Outcome

Became law — signed by Gov. Spencer J. Cox

Summary

What it does

• This bill:
• addresses the timing of a water company's response to a shareholder's proposed change application; and
• makes technical changes.

Every vote on this bill

Bill text

WATER SHAREHOLDER AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: Scott D. Sandall
House Sponsor: 
Casey Snider
LONG TITLE
General Description:
This bill addresses change applications by a shareholder in a water company. 
Highlighted Provisions:
This bill:
▸ addresses the timing of a water company's response to a shareholder's proposed
change application; and
▸ makes technical changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
This bill provides a special effective date.
This bill provides retrospective operation.
Utah Code Sections Affected:
AMENDS:
73-3-3.5
 (Effective 03/01/24)
, as last amended by Laws of Utah 2023, Chapter 238
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
73-3-3.5 (Effective 03/01/24)
 is amended to read:
73-3-3.5 (Effective 03/01/24).
Application for a change of point of diversion, place
of use, or purpose of use of water in a water company made by a shareholder.
(1) As used in this section:
(a) "Shareholder" means the owner of a share of stock, or other evidence of stock
ownership, that entitles the person to a proportionate share of water in a water company.
(b) "Water company" means, except as described in Subsection (1)(c), any company,
operating for profit or not for profit, where a shareholder has the right to receive a
proportionate share, based on that shareholder's ownership interest, of water delivered by the
company.
(c) "Water company" does not include a public water supplier, as defined in Section
73-1-4
.
(2) (a) A shareholder who seeks to file a change application under Section 
73-3-3
 to
make a change to some or all of the water rights represented by the shareholder's shares in a
water company shall:
(i) prepare a proposed change application on forms furnished by the state engineer; and
(ii) provide the proposed change application to the water company by personal delivery
with a signed receipt, certified mail, or electronic mail with confirmation of receipt.
(b) The water company and the shareholder shall cooperate in supplying information
relevant to preparation or correction of the shareholder's change application.
(c) In addition to the information required under Section 
73-3-3
, the proposed change
application shall include:
(i) the certificate number of the stock affected by the change;
(ii) a description of the land proposed to be retired from irrigation in accordance with
Section 
73-3-3
, if the proposed change in place or nature of use of the water involves a
situation where the water was previously used for irrigation;
(iii) an agreement by the shareholder to continue to pay all applicable corporate
assessments on the share affected by the change; and
(iv) any other information that the water company may reasonably need to evaluate the
proposed change application.
(3) (a) The water company shall respond to the proposed change application described
in Subsection (2) within[
: (i) for a permanent change application,
] 120 days after the day on
which the water company receives the proposed change application[
; or
]
.
[
(ii) for a temporary change application, 60 days after the day on which the water
company receives the proposed change application.
]
(b) The water company's response to the proposed change application shall be in
writing and shall:
(i) consent to the proposed change;
(ii) consent to the proposed change, subject to certain conditions described by the water
company; or
(iii) decline to consent to the proposed change, describing the reasons for declining to
consent.
(c) If the water company fails to timely respond, as described in Subsection (3)(a), the
failure to respond shall be considered the water company's consent to the proposed change
application and the shareholder may file the change application with the state engineer.
(4) (a) In reviewing a shareholder's proposed change application, a water company may
consider:
(i) whether an increased cost to the water company or [
its
] 
the water company's
shareholders results from the proposed change;
(ii) whether the proposed change will interfere with the water company's ability to
manage and distribute water for the benefit of all shareholders;
(iii) whether the proposed change represents more water than the shareholder's
proportionate share of the water company's right;
(iv) whether the proposed change would create preferential access to use of particular
company water rights to the detriment of other shareholders;
(v) whether the proposed change will impair the quantity or quality of water delivered
to other shareholders under the existing water rights of the water company, including rights to
carrier water;
(vi) whether the proposed change violates a statute, ordinance, regulation, or order of a
court or government agency;
(vii) if applicable, whether the shareholder has or can arrange for the beneficial use of
water to be retired from irrigation within the water company's service area under the proposed
change; and
(viii) the cumulative effects that the approval of the change application may have on
other shareholders or water company operations.
(b) The water company may not withhold consent if any potential damage, liability, or
impairment to the water company, or [
its
] 
the water company's
 shareholders, can be reasonably
mitigated without cost to the water company.
(c) The water company may require the shareholder to pay all reasonable and necessary
costs associated with the change application, but may not impose unreasonable exactions.
(5) (a) If the water company declines to consent to the proposed change application,
stating its reasons, the shareholder may file an action in district court, seeking court review of
the reasonableness of the conditions imposed for giving consent or the reasons stated for
declining consent and a final order allowing the shareholder to file the proposed change
application with the state engineer.
(b) If the water company consents to the proposed change application subject to
conditions to which the shareholder does not agree, the shareholder may file the change
application with the state engineer as provided in Subsection (6), without waiving the
shareholder's right to contest conditions set by the water company under Subsection (3)(b)(ii).
(c) During or after the completion of the proceeding before the state engineer
commenced under Subsection (6), the shareholder may file an action in district court seeking
court review of the reasonableness of the conditions imposed by the water company for giving
consent.
(d) In an action brought under Subsection (5)(a), (b), or (c), the court:
(i) shall refer the parties to mediation under Title 78B, Chapter 6, Part 2, Alternative
Dispute Resolution Act, unless one or both parties decline mediation; and
(ii) may award costs and reasonable attorney fees to the prevailing party if mediation
does not occur because the other party declined to participate in mediation.
(6) If the water company consents to the proposed change, the water company fails to
respond as required by Subsection (3)(a), the court has entered an order described in
Subsection (5)(a), or the water company consents to the proposed change subject to conditions
to which the shareholder does not agree, as described in Subsection (5)(b), the shareholder may
commence an administrative proceeding by filing the change application with the state
engineer in accordance with Section 
73-3-3
 and this section.
(7) The shareholder shall include as part of the change application filed with the state
engineer under Subsection (5)(b) or (6):
(a) the water company's response to the shareholder's proposed change application;
(b) if applicable, an affidavit signed by the shareholder documenting the water
company's failure to respond in the time period described in Subsection (3)(a); or
(c) if applicable, the court order described in Subsection (5)(a).
(8) (a) The state engineer shall evaluate a shareholder's change application in the same
manner used to evaluate a change application submitted under Section 
73-3-3
, using the criteria
described in Section 
73-3-8
.
(b) Nothing in this section limits the authority of the state engineer in evaluating and
processing a change application, including the authority to require or allow a shareholder or
water company to submit additional relevant information, if the state engineer finds an absence
of prejudice and allows adequate time and opportunity for the other party to respond.
(9) If the state engineer approves a shareholder's change application, the state engineer
may, for shares included in the approval, require that the shareholder requesting the change be
current on all water company assessments and continue to pay all reasonably applicable future
assessments, with credit given to the shareholder for any cost savings to the company resulting
from the change.
(10) By mutual agreement only, and when the shares will rely upon a different
diversion and delivery system, the water company and the shareholder may negotiate a buyout
from the water company that may include a pro rata share of the water company's existing
indebtedness assignable to the shares.
(11) After an application has been approved by the state engineer, the shareholder may
file requests for extensions of time to submit proof of beneficial use under the change
application without further involvement of the water company.
(12) If, after a proposed change has been approved and gone into effect, a shareholder
fails to substantially comply with a condition described in Subsection (9), or any condition
reasonably imposed by the 
water
 company and agreed to by the shareholder, and neglects to
remedy the failure after written notice from the water company that allows the shareholder a
reasonable opportunity to remedy the failure, no less than 90 days after the day on which the
water company gives notice, the water company may petition the state engineer to order a
reversal of the change application approval.
(13) (a) The shareholder requesting the change shall have a cause of action, including
an award of actual damages incurred, against the water company if the water company:
(i) unreasonably withholds approval of a requested change;
(ii) imposes unreasonable conditions in [
its
] 
the water company's
 approval; or
(iii) withdraws approval of a change application in a manner other than as provided in
Subsection (12).
(b) The court may award costs and reasonable attorney fees:
(i) to the shareholder if the court finds that the water company acted in bad faith when
[
it
] 
the water company
 declined to consent to the proposed change or conditioned [
its
] 
the
water company's
 consent on excessive exactions or unreasonable conditions; or
(ii) to the water company if [
it
] 
the court
 finds that the shareholder acted in bad faith in
refusing to accept conditions reasonably necessary to protect other shareholders if the
shareholder's change application is approved.
Section 2. 
Effective date.
If approved by two-thirds of all the members elected to each house, this bill takes effect
upon approval by the governor, or the day following the constitutional time limit of Utah
Constitution, Article VII, Section 8, without the governor's signature, or in the case of a veto,
the date of veto override.
Section 3. 
Retrospective operation.
The amendments in this bill to Section 
73-3-3.5
 (Effective 03/01/24) have retrospective
operation to March 1, 2024.