October 2020 Newsletter

MESSAGE FROM THE PRESIDENT
By Gene Shawcroft

Dear Friends,
During the month of September I had the chance to be in the mountains several times. I was in the upper Provo River drainage, Duchesne drainage as well as the Strawberry River drainage. Many of the lakes I passed were at or near 10,000 feet in elevation. Most were natural lakes, some of which had dams constructed in the 1920’s and 1930’s to increase the storage (a great topic of pioneer ingenuity for another day). The lakes in the Provo drainage were lakes now stabilized at or near their natural elevations and function as natural lakes. The dams have been removed or flattened and the spillway lowered to maintain a natural lake, removing the risk and concern for the maintenance of the dams. Much of the work done to return these lakes to more of a natural condition was done over 20 years ago.

Over the years I have hiked to these lakes to see how Mother Nature has slowly changed the basins to re-vegetate the land that was temporarily under water each year. Grass has grown to the stable water’s edge and in many cases pine trees now 2 to 4 feet tall are growing closer to the water.

Things have changed slowly, and it is hard to notice much difference from year to year, until this year. The significant difference this year was the lack of water running out of the lakes. None of the lakes had any water in the spillways. I have not been to the lakes even in the late fall when there wasn’t at least a small amount of water leaving the lakes. And even worse, the water level was one to two feet below the spillway. This one to two-foot dry ring around the lake was very obvious. Navigating around the lakes was much easier because of the now dry ring.

On a much broader note, unfortunately, these extremely dry conditions are not limited to our neck of the woods. The entire Colorado River drainage area is experiencing these drought conditions. Inflow to Lake Powell in August was near a record low for the month. Temperatures in August were much above normal and numbers of days above certain temperatures were set in many locations in the west.

It is obvious as water managers our responsibilities are NOT lightening up. With these increasing extremes and the continued pressure from growth we will be challenged and will be required to be more cooperative and innovative than ever before. I’m grateful to all of you for dedication to our great state. Your incredible efforts keep the water flowing with such finesse that few people even think about it. I’m honored to be associated with all of you! LET IT SNOW, LET IT SNOW, LET IT SNOW!! Gene

WATER OUTLOOK
By Jordan Clayton
Nature strikes! Two SNOTEL sites in Utah affected by recent wildfire and wind events

SNOTEL sites are situated in mountain environments in order to measure the snowpack’s water content and predict spring runoff, which unfortunately also means that they tend to be vulnerable to wildfires and other natural phenomena. September has seen two of Utah’s SNOTEL sites go down. First, the Parrish Creek site fell prey to the massive windstorm event that impacted the Wasatch Front. Located above Centerville near Skyline Drive, the winds toppled an extraordinary number of trees around the site, including several that landed on the snow pillow and knocked the snow depth sensor arm sideways. The Snow Survey crew plans to rebuild this site by mid October.

More recently, the Brown Duck SNOTEL site (south slope of the Uintas, northwest of Mountain Home) partially burned down, which destroyed the shelter enclosure that houses the electronics and plumbing for the site. Fires in that area are still active, so rebuilding the site will need to wait until conditions are safe. We are hopeful that the weather will hold- if so the Snow Survey staff will bring in a new shelter in late October. However, this is a high elevation site so it’s quite likely that early snow will block passage until next summer.

For questions about these or other SNOTEL sites, contact the Snow Survey staff: https://www.nrcs.usda.gov/wps/portal/nrcs/detail/ut/co ntact/state/?cid=nrcseprd1356082

WEATHER OUTLOOK
BY GLEN MERRILL

In regards to the weather dating back to this past June, anomalous keeps coming to mind. When June rolled in we were only a few weeks away from entering into our driest climatological seasonal period, which begins late in the month and lasts through the first few weeks in July, at which point the southwestern monsoon “typically” comes. We had just been through a spring in which we watched a near normal winter snowpack melt too early, and way too fast. Snowmelt runoff suffered from this significantly. June ended up being quite the roller coaster weather-wise, especially across northern Utah. Northwesterly flow suppressed the high pressure that had been dominating the months of April and May a bit further south allowing for a series of storm systems to cross northern Utah early in the month. Valley rain and mountain snows returned to the north for a period through mid-month, but unfortunately high pressure held pat across the south. All told, significant temperature swings were the norm, from below average during storms, to well above average in between. Salt Lake City recorded its earliest 100F degree day on record, while Logan reported its 6th wettest June on record. Further south across the state, a continuation of the bone-dry conditions which began in the spring continued, as no rainfall was measured in Saint George, and only a trace fell in Cedar City.

So this began the waiting game for the arrival of the southwestern monsoon season as we entered July, but unfortunately it was one which never really even knocked on the door. A dry southwesterly flow aloft dominated, and sub-tropical moisture typically remained shunted well south, or east of the state. Sure there were some isolated strong thunderstorm events, such as a lone event that brought 2” of rainfall within a few hours to the Saint George area in late August, and a few weeks of daily thunderstorms focused over the south-central mountains in July, but these were highly isolated. The big picture across the state was a continuation of bone-dry conditions with well below precipitation (less than 30% of average), and above (to well above) average temperatures (+5 to +10 degrees) through August. With September came little change as high pressure continued to dominate the state, and the broken record of unseasonably warm temperatures, and minimal, if any, precipitation continued through the end of the water year. This was the second year in a row where “non-soonal” season has been more a more fitting term to use for the July early September time frame, than “monsoonal”.

In large, the 2020 water season came in like a lion but left like a lamb. Statewide drought has been the result, with 100% of the state currently in drought, up from 55% coverage last year. Extreme drought has expanded to over 87% of the area (!), while exceptional drought, the highest intensity, covers 16% of the state. Since the beginning of water year 2021 the broken record has only continued as high pressure and dry southwesterly flow aloft has continued to dominate. No precipitation has fallen since October 1 as of this writing, and temperatures have been running at near record levels (+15-+20 degrees). A quick hitting storm will arrive from the northwest later tonight (10/11/2020) and is poised to bring modest precipitation to the north, while dropping temperatures back to near normal seasonal values statewide, but this will only be a pattern “disruption” versus and pattern “change”. Not what we’re looking for.

We need a reprieve, but will we get one? La Nina has returned, a pattern which typically favors the more northern latitudes for above average precip and/or below average temperatures, with the more southern latitudes trending the opposite. La Nina patterns typically favor the Pacific Northwest and Northern Rockies regions for the former, and the desert southwest for the latter. Utah just so happens to be within the transition zone of the two, so realistically, and scientifically, your guess is as good as mine on whether or not we’ll see a below, average, or above winter ahead. I will lean on the northern portions of the state seeing more precipitation than the south in the coming months however.

Water & the Law
Black Diamond Financial v. Big Cottonwood
Pine Tree Water Co. – By Donald N. Lundwall
SMITH HARTVIGSEN PLLC

The Utah Court of Appeals recently issued an opinion that is relevant to all Utah water companies issuing water shares. The Court’s ruling in the case of Black Diamond Financial LLC v. Big Cottonwood Pine Tree Water Company (2020 UT App 90, 470 P.3d 445) addresses a water company’s potential liability if the transfer of a water share is processed in violation of the water company’s bylaws. It also addresses the legal status of a water share certificate transferred to a third party “protected purchaser” under the Utah Commercial Code.

Black Diamond Financial LLC (“Black Diamond”) purchased Lot 25 of the Pine Tree Subdivision in Big Cottonwood Canyon. Black Diamond’s acquisition of Lot 25 did not include any water to service the lot. Prior to that acquisition, Steven Rollins (the previous owner of Lot 25) separately transferred a water share in Big Cottonwood Pine Tree Water Company (“Big Cottonwood”) which provided service for Lot 25 (identified as Share Certificate No. 59) to a third party, Vicki Kincaid, without transferring the lot to Kincaid. Upon surrender of Share Certificate No. 59, Big Cottonwood issued a new certificate (identified as Share Certificate No. 63) in Kincaid’s name. The issuance of Share Certificate No. 63 to Kincaid, however, violated Big Cottonwood’s bylaws, which prohibited transfer of a water share unless the lot associated with that share was also transferred to the transferee. Both Rollins and Kincaid were unaware of such prohibition when Rollins transferred the water share to Kincaid. Black Diamond knew at the time it purchased Lot 25 that there was no water included in the purchase to service the lot. However, Black Diamond purchased the lot anyway, knowing that it was getting the lot at a much lower price. Black Diamond was hoping to find the needed water from another source. Apparently, it also had a common sense understanding that water shares in the subdivision had to stay with the lots, so it believed that it would have some sort of right to the needed water.

After failing to obtain water through alternative means, Black Diamond filed suit against Kincaid and Big Cottonwood, seeking, among other things: (a) to nullify the transfer of the water share to Kincaid; and (b) to require Big Cottonwood to reissue Kincaid’s share (represented by Share Certificate No. 63) in Black Diamond’s name. The trial court rejected Black Diamond’s claims, finding that Kincaid qualified as a “protected purchaser” under Utah Code Ann. § 70A-8- 303(1). Consequently, the trial court ruled that the legal remedy of “specific performance” requiring Big Cottonwood to cancel Share Certificate No. 63 and reissue the share in Black Diamond’s name was not available even though the transfer of the share to Kincaid and the subsequent issuance of Share Certificate No. 63 in Kincaid’s name violated Big Cottonwood’s bylaws. The trial court likewise held that Black Diamond did not suffer any compensable harm from Big Cottonwood’s contractual breach (the bylaws create a contractual relationship between the company and its shareholders) because the lack of water was already factored into the purchase price of the lot. Additionally, given its pre-purchase awareness that Lot 25 lacked water, Black Diamond should not have reasonably expected to be able to generate any rental income from the lot. Finally, even though the trial court found that Big Cottonwood had violated its own bylaws, the court only awarded $1.00 in nominal damages against Big Cottonwood due to Black Diamond’s inability to establish any actual damages.

On appeal, the Court of Appeals affirmed the trial court’s holding that Kincaid was a ”protected purchaser” under the Utah Commercial Code, specifically noting that such protection renders a protected purchaser’s interest in a share certificate “free of any adverse claim.” Accordingly, Black Diamond could not legally displace Kincaid of Share Certificate No. 63 even though the issuance of such share violated Big Cottonwood’s bylaws. Of particular importance, the Court of Appeals also affirmed the trial court’s award of damages against Big Cottonwood, even though they were only nominal damages under the specific facts of this case.

Despite the favorable outcome to the water company in this case, the Black Diamond opinion provides a timely warning to all Utah nonprofit water companies that issue shares of stock to their shareholders because the result could have been very different if Black Diamond had acquired the lot without knowledge of the water share issue. In the absence of such knowledge, Black Diamond would have incurred actual damages by the unauthorized transfer of the water share to Kincaid and Big Cottonwood would have been liable for those damages. Water companies need to be careful and cautious as they approve water share transfers, ensuring that they are following the share transfer provisions in their Articles and Bylaws. Failure to do so could potentially subject a water company to significant liability and monetary damage claims.

A copy of the full Black Diamond opinion, along with additional commentary and citations, may be found at the “Utah Water Law and Water Rights” blog maintained by Jeffry R. Gittins (http://utahwaterrights.blogspot.com; see blog entry for July 12, 2020). The author of this article may also be contacted at (801) 413-1600 or dlundwall@water.law.

MESSAGE FROM THE DIRECTORS CORNER
By Carly Burton

Well, now that the 2020 Utah Water Users Workshop is in the rear view mirror, I wonder if 2021 will find us all in the same dilemma with the Covid Virus. March 15-17, 2021 are the dates that the Workshop was rescheduled for next year. Although it is still about 6 months away I wonder if current conditions are going to change and we will be able to hold the workshop. Currently, Utah is experiencing over 1,000 Covid cases each day and, unless that number drastically decreases, well, you can decide if things will be any different than last March. We will monitor conditions closely in the weeks ahead and we will post any developments on our website at www.utahwaterusers.com.

LAKE POWELL UPDATE

The other day I was looking through the 2019 report of the Upper Colorado River Commission which covers the history of the river through September 30, 2019. It was interesting to note the great range of unregulated flow into Lake Powell over the past 20 years. Since 2000, 12 of those years were much below average, ranging from 25% to 73% of average. 4 years were slightly below average and only 4 years were above average. No wonder Lake Powell has continued to decrease in elevation over this 20 year period. 2020 was also a very dry year, although I haven’t seen the final numbers yet but the lake only rose 12 feet during spring runoff to a 2020 high elevation of 3611 feet. Currently the lake is at elevation 3595.43 feet which is over 105 feet below full pool. Part of the reason the lake has dropped since the spring runoff is to fulfill the obligations of the Reservoir Equalization Agreement between Lake Powell and Lake Mead. The lake will continue to decrease in elevation over the winter so lets hope we have a big snowpack and runoff next spring.

NWRA UPDATE

NWRA staff have cancelled the in-person annual meeting which was scheduled for Scottsdale, Arizona on November 9-12. Instead they will be hosting a virtual meeting that can be accessed through their website at nwra@nwra.org. NWRA staff have several interesting topics including a keynote speech from Brenda Berman, Commissioner of the Bureau of Reclamation, Congressional results and discussions, water management around the world, western water and wildfires and a session on inside Washington and other interesting topics. You can register by going to NWRA’s website shown above.