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Fall 2013 Issue
Upcoming Events
Water Blog
Water Calculation App
Shareholder's Rights Legislation
Supreme Court Decision
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Upcoming Events

 

Utah Association of Conservation Districts Conference
Nov. 6-7, 2013
St. George, UT
For more information click 
here
 
Utah Association of Special Districts Annual Conference
Nov. 6-8, 2013
Provo, UT
For more information click    
Utah Farm Bureau Federation Annual Convention
Nov. 20-22, 2012
Layton, UT
For more information
call the following number: 801-233-3040
  
Utah Cattleman's Association Annual Conference
Dec. 4-6, 2013
Salt Lake City, UT
For more information click
here
  
To view more information about water law in Utah, visit our water blog at

Welcome to the Fall 2013 Issue of Water & The Law.  We hope you will find this newsletter to be helpful and informative.  As always, we welcome your feedback.  If you have questions or comments, please reply to this e-mail or call us at 801-413-1600.
  
Smith Hartvigsen, PLLC

Water Calculation App for Android

 

Smith Hartvigsen is pleased to announce the launch of its new Android app, "Water Chart."  The app allows the user to make water measurement conversions, such as:

  • Convert gallons per minute (gpm) to cubic feet per second (cfs)
  • Convert millions of gallons to acre-feet
  • Convert cubic feet per second (cfs) to acre-feet per year 
The app also converts measurements associated with land, such as:
  • Convert feet to miles
  • Convert rods to feet
  • Convert links to feet
  • Convert kilometers to miles
  • Convert square feet to acres
The app also contains other useful information about Utah water rights, the public land survey system (section, township, and range), and more.

 To download the app go to the following:
 
Or scan the following QR code:
 
 

If you don't have an Android phone, you can find a pdf of a water and land measurement conversion chart by going
 to the following:  http://www.smithhartvigsen.com/resources/archive/Water-Chart-10-20-10.pdf.
  

Shareholder's Rights Legislation

By J. Craig Smith

 

The very controversial water issue, the rights of shareholders of nonprofit water companies, will be back before the Utah Legislature in 2014. The 2013 legislation sparked a lively debate during the session which ended in a deadlock with the House approving the legislation and Senate not acting as the session ended. In legislative parlance the 2013 shareholder rights legislation died on the Board. Rep. Kay McIff (R-Richfield) has now prepared a new version of his 2013 shareholder rights legislation and plans or introducing it during the 2014 legislation session.

 

Historically, nonprofit water companies came into being when individual farmers determined that they needed to band together to construct the water diversion and distribution facilities necessary to irrigate their farms. For decades, this commonality of interest e.g. common facilities to deliver water for a common use, bound these companies together. After construction, these facilities needed to be operated and maintained. The water rights themselves were put in the name of the company and individual ownership of and right to use the water was represented by shares of stock in the nonprofit mutual water company.

 

As irrigated fields began to make way for subdivisions, this commonality of interest began to wane. Shareholders who sold their farms to developers sold their water shares as well. Cities began to either require dedication of or purchased shares and then filed change applications to move irrigation water to municipal sources and uses. In 1993 this practice led to the Utah Supreme Court ruling in East Jordan Irrigation Company v Morgan, commonly known as the East Jordan Case.

 

The Utah Supreme Court ruled that shareholders of mutual irrigation companies could no longer file change applications based on their shares. The Supreme Court reversed the long standing practice of the State Engineer and held that only the company, as the holder of the water right, could file an application to change the point of diversion, place of use, nature of use or season of use of a water right.

 

Although the East Jordan Opinion stated that companies needed to reasonably consider requests from shareholders to file a change application, "reasonable" wasn't defined and some companies began to either refuse to consider change application requests or to impose conditions such as requiring approval of a super majority of all other shareholders.   In 2002, after a two year effort, then Senate President Leonard Blackham (R-Sanpete) obtained passage of what is now found in UCA 73-3-3.5. The first legislation to define shareholder rights in the context of a shareholder initiated change application. While many argue that UCA 73-3-3.5 works well, others disagree.

           

Rep. McIff's current legislation seeks to provide additional rights and protections for shareholders. According to the Representative who is a lawyer and former judge, his legislation has ten objectives:

 

1.         Retain the historical qualification that "a person entitled to use of water" may file a change application.

2.         Require a shareholder change application be submitted to the water company for its response before filing with the state engineer.

3.         Require a water company response within 60 days so that all the issues are on the table as early as possible.

4.         Eliminate stonewalling by the water company and the necessity of front end litigation by a shareholder just to obtain the right to file the change application.

5.         Maximize the opportunity for dispute resolution, including relying on mediation to resolve or refine the issues before administrative review of litigation.

6.         Allow either the water company or the shareholder to seek advance court resolution of legal issues (e.g., corporate issues) not within the purview of the state engineer.

7.         Foster the state engineer's gate-keeping role and facilitate getting the water issues before the state engineer as soon as practical.

8.         Provide more practical compensation options for water companies when water is removed from a delivery system, and equalize the remedies if either side is unreasonable.

9.         Allow a shareholder to elect whether or not to participate in the sale of water or an underlying water right proposed by the water company.

10.       Continue to allow denovo judicial review of the state engineer's final decision.

 

Whether or not Rep McIff's legislation or some derivation thereof passes in 2014 is anyone's guess, but with the continued conversion of farms to subdivisions, this issue will not soon fade away.

 

Utah Supreme Court Decision: Delta v. Vincent

By Jeff Gittins

 

Delta Canal Company v. Frank Vincent Family Ranch

The Utah Supreme Court recently issued its opinion in Delta Canal Co. v. Frank Vincent Family Ranch LC. In this case, Delta Canal Company, Melville Irrigation Company, Abraham Irrigation Company, Deseret Irrigation Company, and Central Utah Water Co. ("DMADC") brought a lawsuit seeking forfeiture of a portion of a water right owned by Frank Vincent Family Ranch ("Vincent"). DMADC alleged that Vincent and/or Vincent's predecessor had forfeited about 20% of the water right due to nonuse and/or abandonment.

 

The district court ruled in favor of Vincent, holding that DMADC was precluded from claiming partial abandonment or partial forfeiture. The district court's ruling was based on its determination that because Vincent had not received his full flow of water each year, Vincent was protected by a statutory exception to forfeiture. Part of the district court's ruling was that Utah law did not recognize partial forfeiture of a water right prior to 2002. DMADC appealed the decision to the Utah Supreme Court.

 

The Utah Supreme Court began its analysis by examining whether partial forfeiture of a water right existed prior to 2002, which was the year when the Utah legislature amended Utah Code 73-1-4 to explicitly provide for partial forfeiture. The Court noted that the doctrine of partial forfeiture had been enunciated in several prior Utah Supreme Court opinions, starting in 1897. The Court next concluded that partial forfeiture is inherent in Utah's beneficial use regime, and that the only way to reconcile the forfeiture statue (73-1-4) with the beneficial use statute (73-1-3) is to conclude that partial forfeiture has always existed in Utah law. The Court also noted that many other courts in the western United States have also concluded that partial forfeiture is inherent in the concept of beneficial use.

 

The Utah Supreme Court next tackled the issue of forfeiture versus abandonment of a water right. The Court reiterated its statements from prior cases that abandonment and forfeiture are distinct legal concepts. Forfeiture is governed by Utah Code 73-1-4. Abandonment, on the other hand, is a common law principle that requires intent by the water right owner to give up the water right (something not required by the forfeiture statute) and does not have a time requirement (like the seven-year period of nonuse required by the forfeiture statute).

 

Finally, the Utah Supreme Court addressed some additional issues related to forfeiture. The Court instructed that a forfeiture analysis should focus on volume (i.e., acre-feet) of water, and not on acres irrigated or on flow (i.e., cubic feet per second or cfs) limitations of a water right. Perhaps the most interesting paragraph of the opinion is paragraph 41, which states:

"Finally, the number of acres irrigated is not determinative in a forfeiture analysis, though it may be relevant insofar as it indicates whether water usage is beneficial. Farmers may reduce the total acres irrigated to grow a more water-intensive crop, or vice-versa, so long as they beneficially use their full entitlement. The number of acres irrigated need not match the number listed on a proposed determination or a final decree from a general adjudication. The central question in any forfeiture proceeding is whether the appropriator used all of its water allowance in a reasonable manner and for a beneficial purpose."

 

This paragraph is interesting because it appears to conflict with the current legal interpretations and policies of the Utah Division of Water Rights.

 

DMADC has filed a Petition for Rehearing with the Utah Supreme Court, in which DMADC has asked the Court to reconsider portions of the decision. Accordingly, it is still possible that the Court's opinion may be amended.

 

To read the full opinion, follow the following link:

http://www.utcourts.gov/opinions/supopin/Delta1354081613.pdf

 

 

  
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. 
Copyright 2013