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Water Strategist Monthly Report on Western Water Markets
Utah
Water Strategist
July 2005

Utah

Acquirer

Central Utah Water Conservancy District

Supplier

Geneva Steel

Water

Purchase of 42,401 AF from various sources in the Utah Lake-Jordan River drainage basin, along with wells, equipment, a pumping plant, easements, and pipelines

Purpose

M&I, irrigation

Terms

Total price of $79,528,880

Status

Pending State Engineer approval of the change application

Central Utah Water Conservancy District (CUWCD) purchased 42,401 AF of water rights in the Utah Lake-Jordan River drainage basin from Geneva Steel. The sale involved more than 50 separate water rights from both surface water and groundwater sources, as well as infrastructure and property, including wells, equipment, a pumping plant, easements, and a pipeline. Priority dates of the water rights range from 1895 to 1955. The total purchase price was $79,528,880. The parties did not perform a cost breakdown, however, the infrastructure property has been estimated to value between $2 million and $3 million. This would bring the estimated price for the water to range from $1,800/AF to $1,830/AF.

Before taking delivery of the water, CUWCD will have to obtain approval of the change application from the State Engineer. Currently, the rights are in a nonuse status approved by the Utah Division of Water Resources (DWR)-so they are protected from forfeiture for nonuse. Geneva Steel placed them into nonuse before the sale. The water right holder can have the nonuse approval extended every five years.

This sale is thought to be the largest water transaction involving a private seller in the state's history. According to Geneva Steel's attorney, Daniel A. Jensen of Parr Waddoups Brown Gee & Loveless, the deal was an important achievement. "The amount of water sold was more than 42,000 acre-feet, which enough to supply 212,000 people annually," said Jensen in a privately circulated legal newsletter. "There was a lot of background work involved in getting the rights ready to sell. This is a significant accomplishment for Geneva, and I'm pleased the water will now be used to meet the future needs of the public."

CUWCD is a political subdivision of the state formed to contract with the United States government for the construction, operation, and financing of the Central Utah Project (CUP)-a project that enables Utah to take and use its share of water from the Colorado River. CUWCD is also a water wholesaler serving municipalities and other agencies in its region. The district provides drinking water from three treatment plants, including one in Ashley Valley serving Vernal City; one in Duchesne Valley serving the communities of Myton, Pleasant Valley, Duchesne City, East Duchesne, and Johnson; and one in Utah Valley serving Orem and Provo.

Another portion of Geneva Steel's water rights were sold to Summit Vineyard LLC, who has plans to construct a power plant in Utah County. Summit's purchase totaled $14 million, however no additional information is available for that transaction due to confidentiality requirements.

Geneva Steel sold its water rights pursuant to its bankruptcy