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Fall Issue 2010
Upcoming Events
Water Blog
Keep Water Tax Free--Vote for Constitutional Amendment C
How Does the Law Treat Lost Share Certificates in Water Companies
Introduction to Wetland Laws and Regulations
Upcoming Events
Utah Association of Special Districts Annual Convention
November 3-5, 2010
Midway, UT
For more information click  
 Smith Hartvigsen, PLLC Open House
November 5, 2010
3:00 p.m. to 7:30 pm
We are now located in the Walker Center at
175 South. Main St., 
 Suite. 300,
Salt Lake City, UT
For more information call
801-413-1600  
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Smith Hartvigsen, PLLC
has a new home.  We are now located in the Walker Center at 175 So. Main St., 
 Suite. 300,
Salt Lake City, UT  84111 


Greetings!
Welcome to the 2010 Fall edition of Water and the Law we hope you will find this newsletter to be helpful and informative.  As always, we welcome your feedback.  We moved offices in August and have an open house set for November 5, 2010.  We would be honored to have you attend.  Please refer to the  "Upcoming Events" sidebar for details.  If you have questions or comments, please reply to this e-mail or call us at 801-413-1600.

Craig Smith
David Hartvigsen
Matt Jensen
Bryan Bryner
Jeff Gittins

Keep Water Tax Free

Vote for Constitutional Amendment C

by J. Craig Smith

 

Constitutional Amendment C will clarify that water rights and facilities of non profit culinary water companies are exempt from property tax.  I, along with almost the entire water community, support and urge all to vote for this constitutional amendment at the general election on November 2, 2010.  As Senator Steve Urqhart and Representative Patrick Painter persuasively state in the Official Utah Voter Information Packet:

 

Water is Utah's most important and precious public resource.  The framers of our Utah Constitution appropriately exempted from property tax, the physical facilities needed to capture, store, treat and deliver water to cities, special districts, and farmers.  The drafters of our Constitution correctly reasoned that an additional tax on these water facilities would only hinder the orderly development of Utah.

 

Recently the question has arisen regarding the taxation of water facilities of non-profit water companies that deliver culinary and irrigation water to their members.  Many of these companies have been in existence for over a hundred years and are the only source of drinking water in their community.

 

Constitutional Amendment C exempts water facilities of non-profit companies from property tax.  This exemption is appropriate and fair for two reasons.  First, nearly all similar water facilities are already exempt from property taxes.  Second, those served by non-profit water companies already pay property taxes on the increased value of their property due to the availability of the water service provided by the non-profit water company.  Without this exemption the members of these non-profit companies are subject to unfair double taxation that other culinary, domestic and agricultural users are not subject to.

 

This proposed amendment had six public hearings before being unanimously passed by both the Utah House and Senate.  The Constitutional Revision Commission, the State Water Development Commission, and the Executive Water Task Force all voted unanimously to support this fair and equitable change to our Constitution.  We encourage you to vote for Constitutional Amendment C. 

 

Tellingly, no one submitted an argument against Constitutional Amendment C for inclusion in the Voter Information Packet. Your support for Proposition C will assure that all water rights and facilities that provide water to the citizens of Utah as a public service will never be levied a property tax.

 

How Does the Law Treat Lost Share Certificates in Water Companies?

 by Matthew E. Jensen

 

This system works well in most cases, but it presents a challenge whenever a certificate is lost, destroyed, or stolen.  Under the Uniform Commercial Code, a portion of which is applicable to transfers of shares of stock in a water corporation, the corporation cannot simply reissue the share with impunity.  If the lost or stolen certificate is later discovered, the corporation would usually need to honor both the replacement certificate and the original.  Because shares of a water corporation represent a right to delivery of a proportionate share of the corporation's water rights, dilution of the shares in this manner is especially unpalatable to the other shareholders.  To account for these risks, many water corporations have a series of requirements before they will issue a replacement certificate.  For example, many corporations require the person requesting a new certificate to post or obtain a perpetual bond to protect the corporation in the event the original certificate surfaced.  Recently, however, it has become more and more difficult to secure such a bond.

 

To address this difficulty, the Executive Water Task Force has recently approved a draft bill in an attempt to streamline this process.  There is not yet a sponsor for the bill, but it is expected to be presented to the 2011 Utah State Legislature for consideration.  The present draft of the bill continues to give the corporation the ability to establish its own requirements for issuing a new certificate in its Articles of Incorporation or Bylaws.  Without such requirements, however, the new law would provide some options for the water corporation to both protect itself and allow a new share to be issued.  For example, the proposed bill would give the water corporation the option to, at the expense of the person requesting the new certificate, publish and mail notice of the request to issue a replacement certificate.  The bill then outlines a process that the corporation can use to resolve share ownership disputes.  There will undoubtedly be further revisions of the bill before it is passed, but it is a step toward solving this challenge that often faces water corporations and shareholders.

 

If you would like more information about lost share certificates, you may contact the author at 801-413-1600 or [email protected].

  
Introduction to Wetland Laws and Regulations
by Bryan C. Bryner

Even though Utah is the second-driest state in the nation, wetlands issues frequently arise in many different situations, including land development, mining and mineral extraction, agriculture, and stream alteration.  The Clean Water Act (CWA) was enacted in 1972 "to restore and maintain the chemical, physical, and biological integrity of the Nation's waters," i.e. to make the nation's waters fishable and swimmable.  The CWA seeks to do this by preventing future contamination and pollution of waters.  The central feature of the CWA is section 301, which prohibits the discharge of any pollutant into a navigable water, including wetlands, unless otherwise authorized by a permit.  One of the most common permits issued under the CWA is a section 404 wetlands permit issued by the Army Corps of Engineers (Corps) for certain discharges of "dredged or fill material" into wetlands. 

In determining whether a wetlands permit is required for a particular project, it must first be determined whether the area that will be impacted by a proposed activity is within the Corps' regulatory jurisdiction under the CWA.  Waters within the Corps' jurisdiction include navigable waters; tributaries to navigable waters; interstate wetlands; wetlands that could affect interstate or foreign commerce; and wetlands "adjacent" to any of the above.  Wetlands are determined based on the presence of three elements: soils, hydrology, and vegetation.  The physical boundaries of a wetland are determined by a "delineation" conducted by either the Corps or a licensed professional.

The U.S. Supreme Court recently muddied the waters regarding the extent of the Corps' jurisdiction over wetlands not immediately adjacent to traditionally navigable waters.  See Rapanos v. United States, 547 U.S. 715 (2006).  In a divided opinion, the Court established two different standards for determining jurisdiction, neither of which has gained traction as the official test. 

Second, the proposed activity must also be within the Corps' regulatory jurisdiction under the CWA for a permit to be required.  Section 404 prohibits the "discharge of dredged or fill material into the navigable waters" except upon issuance of a permit.  Certain activities that otherwise constitute a "discharge of dredged or fill material" are exempted from regulation.  Projects should be analyzed to see if they qualify for an exemption.

If both the area and the activity are within the Corps' section 404 regulatory jurisdiction, any activity that impacts the wetland must obtain a permit from the Corps.  General Permits are issued for regulated discharges with minimal adverse effects, while individual permits are required for potentially significant impacts to wetlands.  The individual permit process is more involved, requiring compliance with criteria established in the EPA's 404(b)(1) Guidelines.  An individual permit may also be denied if it "would be contrary to the public interest." 

Under either type of permit, if impacts to a wetland are unavoidable, the permittee must attempt to minimize the impacts in the design of the project.  If impacts to the wetlands remain after minimization, the permittee must provide compensatory mitigation, which primarily involves restoration, enhancement, creation, and preservation of other wetlands.  The Corps now approves of, and in fact prefers, mitigation banking and in-lieu-fee mitigation as alternatives to traditional compensatory mitigation.  With proper planning many difficulties in dealing with wetlands issues can be prevented.

Click here for a more detailed article discussing wetlands regulation, determining Corps jurisdiction, exemptions from jurisdiction, and the permit process.  Full Article 


We welcome feedback and questions.   Please contact us at [email protected]
This newsletter and the information provided herein are for informational and/or advertising purposes only, and are neither offered nor meant as legal advice or opinion on any issue or matter. Receipt or review of this newsletter does not, nor is it intended to, create an attorney-client relationship with Smith Hartvigsen. A person should not rely or act on any particular matter based on the information included in this newsletter without seeking appropriate legal counsel or other appropriate advice. 
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