Lead Opinion
Plaintiff East Jordan Irrigation Company (“East Jordan”) appeals from a grant of summary judgment upholding the state engineer’s decision allowing defendant Pay-son City Corporation (“Payson”), a shareholder in East Jordan, to change the point of diversion of a portion of East Jordan’s water without the company’s consent. We reverse.
East Jordan is a nonprofit mutual water corporation
Payson bought 38.5 shares of East Jordan’s stock (representing 186.34 acre-feet of water) in 1987. Soon after, it filed an application with the state engineer to change the point of diversion of the water to a city-owned well that draws water from a basin flowing into Utah Lake. Payson sought to use this water for year-round municipal purpose's.
East Jordan, Salt Lake City Corporation, and the Provo River Water Users’ Association protested the proposed change.
East Jordan brought this action in the fourth district court, seeking to overturn the engineer's decision. The parties filed cross-motions for summary judgment on a stipulated statement of facts on the issues of (1) whether Payson as a shareholder in the corporation had the legal right to file a change application in its own name without consent of East Jordan, and (2) whether the state engineer had jurisdiction to consider such an application. The trial court denied East Jordan’s motion, granted Payson’s cross-motion, and subsequently entered judgment in favor of Payson.
On appeal, East Jordan argues that the trial court erred in concluding (1) that in the absence of a specific restriction in the articles of incorporation or bylaws, a shareholder in a mutual water corporation has the legal right to file a change application in its own name even where the company opposes the change, and (2) that the state engineer has jurisdiction to approve the application. Its primary argument is that since the corporation is the legal owner of the water rights, only the corporation may
East Jordan also argues that its articles of incorporation and company policies constitute a “specific restriction” preventing a shareholder from filing a change application without its consent. Moreover, it asserts that the change in fact impairs the vested rights of the company and its other shareholders, and that the state engineer’s ruling in effect wrongfully partitions the company’s title to its water rights. Finally, East Jordan contends that the state engineer lacks jurisdiction to approve a change application in such a situation because he fulfills an administrative function and lacks the authority and training to adjudicate the legal rights of the parties.
Payson responds that mutual water companies are fundamentally different from other types of corporations, that shareholders in such corporations have direct interests in the water rights held by the corporation, and that among these rights is the right to change the place of diversion. Payson contends that while East Jordan may have legal title to the water rights, the shareholders have equitable title. Payson also disputes East Jordan’s other claims.
We first state the standard of review. This matter arose in the district court under Utah Code Ann. §§ 73-3-14 (1989) and 63-46b-15 (1989) as a de novo review of the state engineer’s decisions approving Payson’s change application. In determining whether the district court properly granted summary judgment as a matter of law, this court gives no deference to the trial court’s legal conclusions and reviews those conclusions for correctness.
We first address the issue of whether Payson has the legal right to file a change application in its own name without the consent of East Jordan. We conclude that Payson, as a shareholder in a mutual water corporation, has no such right. We base this decision on the statutory scheme governing the appropriation of public waters, the principles of corporate law bearing on the function and power of boards of directors to manage corporate affairs in the interest of shareholders as a whole, and the dictates of sound public policy.
The right to change a point of diversion, place, or purpose of water is governed by Utah Code Ann. § 73-3-3(2) (1989), which provides:
(a) Any person entitled to the use of water may make:
(i) permanent or temporary changes in the place of diversion;
(ii) permanent or temporary changes in the place of use; and
(iii) permanent or temporary changes in the purpose of use for which the water was originally appropriated.
(b) No change may be made if it impairs any vested right without just compensation.
This case ultimately turns on whether a shareholder in a mutual water corporation is “a person entitled to the use of water” under the statute. Payson narrowly focuses on the language of this section to support its position that it has the right to change its point of diversion over East Jordan’s objection. However, section 73-3-3(2)(a) must be read in light of the entire statutory scheme. Payson fails to consider whether it is “entitled to the use of water” in the same manner proposed by a change application.
Utah Code Ann. § 73-3-1 directs how one becomes legally “entitled” to the use of water:
Rights to the use of unappropriated waters of this state may be acquired only as provided in this title. No appropriation of water may be made and no rights to the use thereof initiated and no notice of intent to appropriate shall be recognized except application for such appropriation first be made to the state*313 engineer in the manner hereinafter provided, and not otherwise.
(Emphasis added.)
Rights to the use of water may be obtained by two methods under Utah’s appropriation scheme. The first is commonly known as a diligence claim. Prior to 1903, the law allowed a person to appropriate public water by merely turning or diverting water from its natural channel and putting it to beneficial use.
As of March 12, 1903,
Payson has not filed an application to become an appropriator of public waters. To the contrary, title to company water rights was judicially confirmed in East Jordan under the Morse and Booth Decrees.
Payson claims to be an “equitable owner” of its shares of East Jordan’s water rights. However, its equitable ownership remains subject to the general rule governing corporations that directors, rather than shareholders, control the affairs of the corporation. East Jordan was organized under the territorial laws in 1878 and currently is governed by the Utah Nonprofit Corporation and Co-operative Association Act.
. What Payson did gain by its purchase of East Jordan shares is the right to receive a proportionate share of the water distributed by East Jordan out of its system in the same manner as all other shareholders.
The pursuit or business of this association is, and shall be the construction, operation and maintenance of a canal— said canal to extend from a point in the Jordan River ... to ... Salt Lake city, ... the purpose of said canal being to direct a portion of the waters of the said Jordan River, to be appropriated, used, and disposed of, sold and distributed by said association, for agricultural, manufacturing, domestic or ornamental purposes ... and to do and perform such work and acts, and use such mechanical or other means and appliances as may be necessary to maintain or increase the flow of water in the said Jordan River.
Payson’s rights as a shareholder and its relationship with East Jordan are dependent on and limited by the scope of East Jordan’s articles of incorporation, which Payson agreed to by virtue of its purchase of shares. Here, Payson is seeking a point of diversion, place of use, and nature of use that are substantially different from those of the .other shareholders and those anticipated in East Jordan’s articles of incorporation. Payson purports to divert its share of the water before it enters East Jordan’s delivery system, to transport the water outside of East Jordan’s service, and to use it for municipal purposes.
The agreement between East Jordan and its shareholders imposes the duty on the association to manage its affairs in the interest of its shareholders as a whole.
Three other states have addressed this issue. Payson argues that we should follow the Colorado rule set forth in Wads-worth Ditch Co. v. Brown.
Unlike Utah law, under the Colorado appropriation scheme, the change process is commenced in a court of competent jurisdiction rather than with an application to an administrative agency.
Further, we are more persuaded by California authority that has established through ease law what Utah has established by statute. In Consolidated People’s Ditch Co. v. Foothill Ditch Co.,
Such stockholders are in that sense and to that extent, but to none other, owners of the water and water rights which the corporation possesses, and over the distribution of which it exercises under general laws and under its particular bylaws full and exclusive control.19
The court also noted that the term “mutual water company” had no legal meaning that would differentiate such companies from other corporations administering property for the benefit of their stockholders.
would necessarily be to admit the possession of similar rights in each and every stockholder in each of said corporations to go and do likewise, and it is too plain for argument that such an admission would result in a state of inextricable discord and confusion among the owners of water rights of various sorts [all over California]. The creation or threatened danger of such a consequence would of itself supply a sufficient reason for the use of the injunctive processes of the court in the way of its prevention.22
Payson argues that California water law is a “mixed bag” of appropriative and riparian concepts and that Utah has always followed the “Colorado doctrine” of appropriation. Both of these arguments may be correct, but they are irrelevant. The cases supporting both the Colorado and the California positions are completely unrelated to whether the underlying water rights were appropriative or riparian.
More important, we are persuaded by the reasoning of the California court in Consolidated People’s Ditch Co. that allowing the shareholder this right would ultimately lead to “a state of inextricable discord and confusion among the owners of water rights.”
It should be observed that our ruling today does not leave the shareholder without a remedy. The rights that Payson or any other shareholder has to the use of water and the points of service within East Jordan’s system can be readily determined
We need not reach East Jordan’s contention that the state engineer lacked jurisdiction to approve a shareholder’s change application because we hold that the shareholder in a mutual water corporation does not have standing to change its point of diversion absent the consent of the corporation. We reverse.
Notes
. A mutual water corporation is a nonprofit corporation formed to supply water only to its shareholders. 3 Clesson S. Kinney, Kinney on the Law of Irrigation and Water Rights, § 1480, at 2659 (2d ed. 1912) [hereinafter Kinney]. Water is delivered to shareholders in proportion to the amount of stock owned by each. Id. § 1483, at 2665. Water shortages are shared proportionally by the shareholders, and operating costs are paid by assessment on the stock. See gener
.Salt Lake City Corporation owns 2,067 shares of stock in East Jordan (20.67%). The Provo River Water Users’ Association apparently does not own any stock, but it alleges that it owns rights in the Provo River that depend in part on an exchange for waters stored in Utah Lake. See generally Provo River Water Users' Ass’n v. Morgan,
. The engineer issued a decision after the first hearing, in which he approved a diversion of 89.82 acre-feet. Both sides petitioned for reconsideration, and the engineer held another hearing, resulting in the final order discussed in the text.
. East Jordan’s complaint also alleged that the proposed change would impair the vested water rights of the company. Salt Lake City Corporation, and the Provo River Water Users’ Association. But after the trial court granted Payson’s cross-motion, plaintiffs amended the complaint and deleted those allegations so that the court’s ruling disposed of all issues in the case.
. Bonham v. Morgan,
. Bishop v. Duck Creek Irr. Co.,
. See 1903 Utah Laws ch. 100, § 47.
. See Salt Lake City v. James A. Gardner, Fourth District Court, Utah County, June 5, 1909 ("Booth Decree"); Salt Lake City v. Salt Lake City Water & Elec. Power Co., Third District Court, Salt Lake County, Civil Nos. 2861, 3449, 3459, July 15, 1901 ("Morse Decree”).
. We also note that water rights are transferred by deed in substantially the same manner as real estate. In contrast, a shareholder’s interest in a water company is personal property and is transferred as such. Utah Code Ann. § 73-1-10 (1989).
. Utah Code Ann. §§ 16-6-18 to-112. Section 16-6-20(l)(c) provides that the act applies to “mutual irrigation, canal, ditch, reservoir and water companies and water users’ associations organized and existing under the laws of this state on the effective date of this act.”
. See Anderson v. Grantsville N. Willow Irr. Co.,
. Although we refer to the "articles of incorporation,” we note that the documents submitted by the parties bear the label "Articles of Association.” Because the documents are indeed articles of incorporation, we refer to them as such.
. See Park v. Alta Ditch & Canal Co.,
. See Summit Range & Livestock Co. v. Rees,
.
. Id. at 1061. We note that Idaho followed Colorado for some time but changed its position by statute in 1943 to provide explicitly what the Utah statute provides for implicitly, namely, that a shareholder may not change its point of diversion without the consent of the corporation.
.See Colo.Rev.Stat. §§ 37-92-201 to -307.
.
. Id.
. Id.
.Id.
. Id. at 921.
. Id.
. See Syrett v. Tropic & E. Fork Irr. Co., 97 Utah 56,
Dissenting Opinion
dissenting:
I respectfully dissent. The majority holds that a shareholder in a mutual water corporation does not have the right to change his or her point of diversion because the water rights are owned by the company rather than the shareholder. In so holding, the majority makes a number of crucial errors. First, the majority improperly treats water like an ordinary corporate asset and assumes that mutual water companies are the same as other corporations. The majority further ignores long-established Utah case law holding that mutual water corporations may not interfere with a shareholder’s use of his or her share of water unless the shareholder’s use harms the corporation or other shareholders. Finally, the holding is bad policy; it assumes without adequate analysis that allowing shareholders to change their points of diversion would destroy water corporations, and it ignores the need for flexibility and transferability of water rights.
The main opinion reasons that East Jordan, as the true “owner” of the water rights, has the sole right to change the point of diversion. This position ignores the fact that we have previously established that shareholders in mutual water companies do in fact have ownership interests in the water rights.
For example, in Genola Town v. Santaquin City,
This court affirmed. Santaquin raised a number of objections, but the only “serious question”
Water rights are pooled in a mutual company for convenience of operation and more efficient distribution, and perhaps for more convenient transfer. But the stock certificate is not like the stock certificate in a company operated for profit. It is really a certificate showing an undivided part ownership in a certain water supply.
We reiterated the principle that shareholders in a mutual water corporation actually own water rights in St. George City v. Kirkland,
“merely provided another vehicle for such ownership (stockholders’) and use of such water” consequently that such ownership continued after 1953, and could not be attacked if the same beneficial use continued, whether by individual shareholder, whether by agreement of shareholders among themselves, whether administered by an agent, partnership or anything else.
Id.
The majority concludes that East Jordan is the sole owner of the water rights because it is named in the decree. However, ownership of water is far more complex than ownership of other forms of property, and the mere existence of legal title does not determine all the rights of ownership. Indeed, even the term “ownership” is an oversimplification. A number of different rights are subsumed under this concept, but here we are concerned with only one: the right to control the point at which the water is taken. Due to the unique nature of both water and the mutual water corporation, a shareholder has at least some ownership interest in the water rights held in the corporation’s name, and based on Utah case law dealing with similar issues, part of this interest includes the right to change the point of diversion.
Water is a unique commodity in a desert state such as Utah; society could not survive here on a large scale if people did not capture, divert, and use the small amount of water that is present. Thus, while a water right is considered a “property right,” certain legal principles regarding water have developed in the West that differ significantly from the rules regarding other forms of property. First, the law does not allow a private person to really “own” water. All waters in the state belong to the public, Utah Code Ann. § 73-1-1, and one may obtain only the right to use water. Melville v. Salt Lake County,
These differences between water and other forms of property are crucial in determining the respective rights of shareholders and mutual water corporations. For example, while the water rights may be held in the corporation’s name, only the shareholder has the right to use the water. The shareholder, not the corporation, decides whether to use his or her water on certain crops, for domestic use, or for some other purpose. Further, the shareholder decides where he or she will use this water. The mutual water corporation is under a perpetual duty to deliver water to the shareholder, 3 Clesson S. Kinney, Kinney on Irrigation and Water Rights § 1486 (2d ed. 1912) [hereinafter Kinney] (citing Miller v. Imperial Water Co.,
Ownership of water rights is thus not as straightforward as the majority opinion implies. The shareholder is an essential part of the ownership equation, for he or she is the one who actually puts the water to beneficial use. Indeed, as East Jordan concedes, if the shareholder fails to use his or her share of water, the corporation may lose its rights. Contrary to the majority’s conclusion, the name on the decree therefore does not necessarily determine who “owns” the water rights.
In holding that water rights are company property and that only the board of directors has control over the point or points of diversion, the majority also ignores critical differences between mutual water companies and other corporations. The most striking difference is that mutual water corporations exist solely to serve their shareholders. While it may be technically true that the typical business corporation also exists for the benefit of its shareholders, it is more accurate to say that the business corporation operates to make a profit for itself that the shareholders then receive as dividends. A mutual water company, on the other hand, exists to serve its shareholders directly. The shareholders do not benefit from the company’s balance sheet; rather, they benefit because they receive water.
This court historically has recognized the unique nature of mutual water corporations when considering the rights of their shareholders. The cases discussed above treat the mutual water corporation as merely a device to manage delivery and distribution of water rather than as the owner of water. It has often been said that even where a mutual water corporation owns legal title to water rights, the shareholders own “equitable title.” See, e.g., Kinney, §§ 1475, 1481. This court has stated that a mutual water company “is simply a trustee for the stockholders, and not the owner of the water." Center Creek Water & Irr. Co. v. Lindsay,
In Baird v. Upper Canal Irrigation Co.,
This court affirmed. On appeal, the company argued, among other things, that it could not be compelled to connect the shareholder’s pipe because doing so would violate a company regulation that prohibited any future connections that would divert culinary water outside the company’s service area. The court rejected this argument:
Nor do we see upon what theory the stockholders of the defendant company claim the right to limit the use of the culinary and domestic water to the homes and premises within the area irrigated by water controlled and regulated by the defendant company. When a stockholder has the water to which he is entitled delivered into his private pipe line, it becomes his personal property. One of the incidents of the ownership of property is the right to use, lease, or otherwise dispose of the same as the owner may desire so long as the rights of others are not interfered with. In this case it is difficult to see how the rights of the other stockholders would be affected by the mere fact that the water flows out of a private pipe line beyond the limits of the land irrigated by water controlled by the defendant company rather than within such boundary lines. A regulation made solely upon such a basis is an unwarranted interference with the rights of stockholders not consenting thereto.
Id.
Baird established that water becomes the shareholder’s property once it is delivered to him or her and that the shareholder has the right to use it as he or she wishes as long as it does not interfere with the rights of others. But Baird is compelling for three additional reasons. First, East Jordan complains that Payson's proposed change would result in the removal of water from East Jordan’s service area and would change from irrigation to municipal use. As Baird demonstrates, these are not valid concerns of the corporation.
Third, and most important, Baird suggests a practical reason to allow a shareholder to change his or her point of diver
This court has also established that a shareholder may take his or her water from anywhere along the company canal he or she chooses, as long as he or she does not increase costs or otherwise negatively affect the corporation. This principle was not made explicit in Baird, but it is a necessary predicate for the court’s holding that the corporation had to connect the shareholder to the pipeline at a point of her choosing. A similar mandamus case is Syrett v. Tropic & East Fork Irrigation Co.,
Another similar ease is Moyle v. Salt Lake City,
We affirmed, noting that while the water had always been delivered to the plaintiff’s Parley’s Canyon lands, nothing in the contract required that the water be delivered there. In making this determination, the court discussed the unique nature and importance of water in a desert state such as Utah. Id.
Assuming the city’s canal to be a natural stream, and that the plaintiff had appropriated and was entitled to divert the quantity of water found by the court from such stream, no one would doubt her right to change the place of diversion to some other point on the stream, so long as she, in making the change, did not interfere with the rights of any one else. The city concedes that the plaintiff is entitled to a certain quantity of water flowing in its canal, and that she has received it and it has been delivered to her at a particular place. Now, why may she not change the point or place of delivery precisely upon the same conditions and upon the same theory that she may change the point or place of diversion on the stream, provided she does so without increasing or adding to the expense of the city in delivering the water*321 to her? Is not the right to change the place of diversion under the law based upon the fact that conditions change, and that it may be that the original point of diversion selected by the appropriator no longer responds to his needs, and that to continue the old place of diversion may result in waste?
Id. The court stressed, however, that it was not deciding what the result would be if the contract had in fact specified a place of delivery. Id. at 663.
Moyle dealt with an exchange contract rather than with a shareholder in a mutual water corporation, but its reasoning applies to this dispute as well. As noted above, a corporation has a duty to deliver water to its shareholders, a duty contractual in nature. Similarly, while East Jordan points out that shareholders have always taken their water through the company’s dam and canal, it has not cited any provision in its articles of incorporation, bylaws, or other regulations that requires a shareholder to do so. Further, Moyle recognizes that water has special status in this arid region, that conditions and needs change, and that a water user should be able to change his or her use to reflect changed conditions. Id. at 662-63.
These cases establish that a shareholder’s interest in the water of a mutual company includes the right to decide where he or she will receive the water and where and how the water will be used, as long as a proposed change does not increase the company’s costs or otherwise interfere with its ability to manage the water supply for the benefit of all shareholders.
A shareholder’s rights are not unlimited, of course. This court has decided several shareholder-company disputes in favor of the corporations, but only where the shareholder’s claim would have increased the company’s costs or interfered with the management and distribution of the water supply. For example, we have held that a mutual water corporation is not required to extend a company ditch to reach a shareholder’s lands. Swasey v. Rocky Point Ditch Co.,
East Jordan relies on Park v. Alta Ditch & Canal Co.,
The issue in Park was whether the exchange of water divested the plaintiff of his rights. The court held that it did not, since the Alta Spring water would be replaced by water from Deer Creek Reservoir. Under the agreement in Park, the plaintiff apparently would have received the same amount and quality of water at the same place as he had previously received it — the only difference would be the source. Id. If the court had found for the plaintiff, it would effectively have given each shareholder veto power over any exchange agreement, even where the exchange would not harm the shareholder in any way. This would have interfered with the corporation’s ability to manage the water supply as a whole.
Park and these other cases do not preclude a shareholder from changing his or her point of diversion, because such a change does not interfere with the company’s ability to manage its water supply. The majority asserts that mutual water corporations cannot manage their affairs if shareholders are allowed to make these changes but fails to specify how this is so. Instead, like the California Supreme Court sixty-five years ago, the majority simply assumes that affirming the engineer’s order would be the downfall of such corporations. See Consolidated People’s Ditch Co. v. Foothill Ditch Co.,
The engineer’s order does not interfere with East Jordan’s ability to “manage” the company water supply.
Not only is the majority’s holding contrary to Utah case law, but it is also bad policy. First, it will not actually increase East Jordan’s control over its water supply. Payson will still be free to use its share of company water for municipal purposes. As discussed above, under Baird and Syr-ett the corporation must connect the shareholder to the company canal at any point the shareholder chooses, as long as it does not injure the corporation or the other shareholders. Baird also established that a shareholder may do whatever he or she wants with water once it is delivered. Thus, there is nothing East Jordan can do to prevent Payson from taking its water from the East Jordan canal and pumping it to the city. In my view, the majority’s approach will increase the costs for everyone involved without providing any benefits.
Further, preventing shareholders from changing their points of diversion interferes with the ability of water users to respond to new needs for water. Utah’s population has been and is expected to continue growing at a substantial rate,
This case presents a classic example. The person who sold the stock to Payson apparently decided that he or she could receive a higher return by selling the water rights than by using them for farming. Presumably, Payson likewise concluded that the returns from the new water exceeded the purchase and transfer costs and that purchase of East Jordan stock was
I do not mean to imply that economic efficiency is the sole consideration in water law or that transfers must be allowed without restrictions. One commentator has noted:
It must be emphasized that policies which restrict market activities and make transactions more costly are not necessarily wasteful or inefficient. They are an expression of the concerns that members of society and policy makers have about reallocating water through market processes and they provide protection for third-parties who may be impacted by water transfers.
Bonnie G. Colby, Economic Impacts of Water Law — State Law and Water Market Development in the Southwest, 28 NatResJ. 721, 722 (Fall 1988). There can be little doubt that social and environmental concerns should override economic efficiency in some situations.
The majority, driven by the unfounded and unsubstantiated fear that allowing shareholders to change their points of diversion will destroy Utah’s water delivery systems, has overlooked crucial differences between the control of water in mutual water companies and the management of other forms of property in ordinary corporations. In its desire to prevent East Jordan’s hypothetical “parade of horribles,” it has also ignored years of Utah case law establishing that a shareholder in a mutual water corporation has a direct ownership interest in the water held in the corporation’s name and the right to use such water however he or she sees fit, as long as the use does not harm the corporation. Finally, the majority assumes without adequate analysis that a change in a shareholder’s point of diversion necessarily interferes with the corporation’s ability to protect the interests of the shareholders as a whole. I therefore dissent.
.
. This section provides in full:
No municipal corporation, shall directly or indirectly, lease, sell, alien or dispose of any waterworks, water rights, or sources of water supply now, or hereafter to he owned or controlled by it; but all such waterworks, water rights and sources of water supply now owned or hereafter to be acquired by any municipal corporation, shall be preserved, maintained and operated by it for supplying its inhabitants with water at reasonable charges: Provided, That nothing herein contained shall be construed to prevent any such municipal corporation from exchanging water-rights, or sources of water supply, for other water-rights or sources of water supply of equal value, and to be devoted in like manner to the public supply of its inhabitants.
. This passage is repeated verbatim in St. George City v. Kirkland,
. Further, East Jordan’s articles of incorporation expressly allow the company to appropriate, use, or distribute water for "agricultural!,] manufacturing, domestic or ornamental purposes."
. This will be discussed in greater detail below.
. East Jordan’s articles of incorporation do not expressly prevent a shareholder from making such a change without company consent. I do not address whether or by what means a mutual water company may restrict a shareholder’s right to change his or her point of diversion, though I note that Colorado allows a corporation to do this in the articles of incorporation, bylaws, or other written restriction. See, e.g., Fort Lyon Canal Co. v. Catlin Canal Co.,
. I find it relevant that the state engineer was not persuaded by the concerns expressed by East Jordan and the majority. While the engineer’s decision is not entitled to any deference on de novo review, it is worth noting that he is an expert in water distribution and deals often with mutual water corporations.
. The majority also asserts, "Change in point of diversion certainly implicates management of water supply as a whole.” Again, the majority does not provide any supporting analysis for this argument, nor can I see how this is so: The engineer’s order provides that enough water will be diverted into East Jordan’s canal to supply the remaining shareholders.
, I do have one concern about the engineer’s order, however. The order provides, "Any additional costs incurred by the Utah Lake and Jordan River Commissioner in the administration of the change application shall be borne by the applicant." I do not have any quarrel with this; however, Payson should be liable for any costs incurred by East Jordan as well. For example, if East Jordan has to spend more time and money monitoring Payson’s well than it would to monitor withdrawals made from the company canal, it should be reimbursed for these additional costs. I therefore would direct that the engineer’s order be modified to include this provision. As long as a shareholder is responsible for any additional costs incurred by a mutual water company due to changes in the shareholder’s point of diversion, however, the shareholder has the right to make such a change without the consent of the corporation.
. Utah’s population is projected to increase to over 2.4 million by the year 2010. This would reflect a growth rate of 1.7 percent per year, more than double the national average. Utah Department of Natural Resources, State Water Plan § 4, at 4-2 to 4-6 (January 1990).
. See Ray Jay Davis, Utah Water Rights Transfer Law, 31 Ariz.L.Rev. 841, 841-42 (1989) [hereinafter Davis].
. A number of factors contribute to the decline of large-scale water projects: the optimal reservoir sites have been used, political pressure has made the federal government reluctant to grant huge subsidies for such projects, and public opposition to dams on environmental grounds has increased. Bonnie G. Colby, Economic Impacts of Water Law — State Law and Water Market Development in the Southwest, 28 Nat.Res.J. 721, 725 (Fall 1988) [hereinafter Colby].
. See, e.g., Steven J. Shupe et al., Western Water Rights: The Era of Reallocation, 29 Nat. Res.J. 413, 414 (Spring 1989); Colby at 724; Davis at 841-43; Thompson at 702. In Utah, agriculture accounts for over 90 percent of the consumptive use of water. U.S. Geological Survey, National Water Summary 1987 — Water Supply and Use: Utah 491, 496 fig. 4 (U.S.G.S. Water-Supply Paper 2350).
. I note that Utah Code Ann. § 73-3-8(1) provides that the state engineer shall reject an application for appropriation if the proposed plan “will prove detrimental to the public welfare." These same considerations apply to applications for permanent changes under Utah Code Ann. § 73-3-3. Utah Code Ann. § 73-3-3(5)(a); Bon-ham v. Morgan,
. The record reveals that East Jordan has allowed the Salt Lake County Water Conservancy District, which owns 2000 shares (20 percent) of company stock, to change the diversion of its 10,000 acre-feet of company water for delivery outside of East Jordan’s service area.