Court Opinion

ID: 9537677
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:21:18.290354+00
Date Added: 2024-06-11T14:56:53.580322
License: Public Domain

DURHAM, Justice,
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, 96 Utah 88, 80 P.2d 930 (1938), two municipalities entered into a complex exchange agreement wherein Santaquin agreed to deliver culinary water to Genola in exchange for cash and shares of stock in a mutual water corporation, which stock entitled the holder to delivery of irrigation-quality water. The citizens of Santaquin protested, and the city refused to perform. Genola sued for specific performance, and the trial court found for the plaintiff.
This court affirmed. Santaquin raised a number of objections, but the only “serious question”1 presented was whether exchanging water in kind for shares in a mutual water company violated article XI, section 6 of the Utah Constitution, which forbids a municipality from alienating its water rights unless it receives in exchange water rights “of equal value.” Utah Const, art. XI, § 6.2 We held that water company stock could be of equal value to direct water rights, because stock in a mu*317tual water company is essentially the same as ownership of water rights themselves:
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.
80 P.2d at 936 (emphasis added);3 see also Smithfield West Bench Irr. Co. v. Union Central Life Ins. Co., 105 Utah 468, 142 P.2d 866, 869 (1943) (“The shareholders are in effect owners in common of the waters with certain limitations as between one another governing the use thereof.” (emphasis added)).
We reiterated the principle that shareholders in a mutual water corporation actually own water rights in St. George City v. Kirkland, 17 Utah 2d 292, 409 P.2d 970 (Utah 1966). In Kirkland, a mutual water company’s charter lapsed in 1953 after fifty years of existence, and the company did not reincorpórate until four years later. After reincorporation, a number of people filed claims to the company’s water, arguing that the corporation forfeited its water rights when it ceased to exist. This court rejected these claims, holding that the shareholders continued to own the water rights “although the agency charged to administer and deliver the water to those entitled, was as dead as a mackerel.” Id. 409 P.2d at 971. The court held that the corporation was not the owner of the water rights — it simply provided a method for the shareholders to distribute the water among themselves. We upheld the trial court’s conclusion that the corporation
“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. 409 P.2d at 971 (emphasis added).
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, 570 P.2d 687, 688 (Utah 1977); see Provo River Water Users’ Ass’n v. Morgan, 857 P.2d 927, 933 n. 8 (July 27, 1993). Second, as opposed to any other form of private property, one has the right to use water only to the extent that he or she puts it to “beneficial use.” Melville, 570 P.2d at 688; Utah Code Ann. § 73-1-3 (“Beneficial use shall be the basis, the measure and the limit of all rights to the use of water in this state.”). Third, in accordance with the beneficial use principle, one forfeits his or her *318rights to water after failing to use it for five years. Utah Code Ann. § 73-1-4.
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., 156 Cal. 27, 103 P. 227, 229 (1909)); it may not decide that it would rather deliver the water to someone else or for some other purpose. If it fails to deliver the proper share of water to the shareholder, the shareholder has a remedy in mandamus, Baird v. Upper Canal Irr. Co., 257 P. 1060, 1064-65 (Utah 1927); Miller, 103 P. at 229, or in damages, Swasey v. Rocky Point Ditch Co., 617 P.2d 375, 379 (Utah 1980). Moreover, a mutual water company cannot maintain its water rights unless its shareholders use the water. Since one does not have a legal right to the use of water unless and until someone puts it to beneficial use, “[i]t therefore follows that, where the company is not itself the consumer, but simply furnishes and distributes the water to others, in order to perfect the appropriation, it takes the joint action of both the corporation and the consumers.” Kinney, § 1475, at 2650. Thus, in Kirkland, the shareholders owned the water rights: “The question is whether [the shareholders] beneficially used the water during the 50 year period_” 409 P.2d at 971.
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, 21 Utah 192, 60 P. 559, 560 (1900) (emphasis added); see also Smithfield West Bench Irr. Co., 142 P.2d at 869 (“The waters of a mutual irrigation company belong to the users, the company being merely a distributing and apportioning trustee." (emphasis added)). Water is therefore not simply a corporate asset over which the board of directors automatically has exclusive control.
*319The majority opinion also fails to acknowledge case law that has developed regarding the relative rights of mutual water companies and their shareholders. While this court has never faced the precise issue of whether a shareholder may change his or her point of diversion without company consent, we have considered the relationship in a number of other contexts. These cases establish that a shareholder in a mutual water corporation has a right to do whatever he or she wants with his or her share of the water, and the company may not interfere with this right. Further, the shareholder has the exclusive right to determine where and how the water will be used.
In Baird v. Upper Canal Irrigation Co., 70 Utah 57, 257 P. 1060 (1927), the plaintiff shareholder brought an action in mandamus to compel the defendant mutual water corporation to connect her pipeline to the company’s main line at a certain point. The plaintiff was already receiving her share of company water through three other connections, but she sought a new connection so that she could supply twelve or thirteen other houses with water. The trial court found for the plaintiff and ordered the company to make the connection as long as the plaintiff paid the expenses of doing so.
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. 257 P. at 1065 (emphasis added).
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.4 Second, Baird implies that a shareholder would not need the company’s permission to file an application for a change in place or purpose of use, and these changes are governed by the same statute that covers changes in points of diversion. Utah Code Ann. § 73-3~3(2)(a)(ii), (iii). In other words, the phrase “person entitled to the use of water” probably would include a shareholder for purposes of subparagraphs (ii) and (iii). This interpretation should also apply to changes in the point of diversion governed by subparagraph (i). Id. § 73-3-3(2)(a)(i).
Third, and most important, Baird suggests a practical reason to allow a shareholder to change his or her point of diver*320sion over the company’s objection. Under its reasoning, East Jordan could not object if Payson took its share of water through the company’s canal and then somehow delivered it up to the city through its own facilities (e.g., by pumping the water through an aqueduct).5 And since Payson has the right to take its water wherever it wants after the water enters its own pipes and ditches, it should also be allowed to take the water from further up the natural watercourse. Given that Payson can use its water for municipal purposes anyway, it is illogical to force Payson to pump the water at great expense when it could just as easily take the same amount of water from a point upstream.
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., 101 Utah 568, 125 P.2d 955 (1942). In Syrett, the plaintiff shareholder owned land on the plateau above Tropic Valley near Bryce Canyon. He sought an order compelling the corporation to deliver water to these lands, and the trial court found for the plaintiff. This court affirmed, rejecting the corporation’s argument that its articles of incorporation did not authorize it to deliver water on the plateau. The court also noted that “since under [the articles] the water is to be divided to each person, without specifying where he is to receive it, it would appear that a stockholder should be entitled to receive his proportionate amount of water at any reasonable point along the canal system.” Id. at 957.
Another similar ease is Moyle v. Salt Lake City, 50 Utah 357, 167 P. 660 (1917). In Moyle, the plaintiff entered into a contract with Salt Lake City in which she exchanged her rights to culinary water from Parley’s Canyon Creek for nonpotable water from Utah Lake to be delivered through a canal from the Jordan River for irrigation. The agreement was silent as to the place of delivery, but for over twenty-five years, the city delivered the plaintiff’s water to her land just below Parley’s Canyon. The city annexed' these lands, and they ceased to be used for farming. The plaintiff had other land below the city’s canal about five miles south of her Parley’s Canyon land (closer to the head of the canal), and she sought to have the water delivered to that land. The trial court ordered the change, finding that the city’s costs of delivering the water would not increase.
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. 167 P. at 662. The court also noted that a contract purchaser of water should have the same right to change his or her point of delivery as a direct appropriator:
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 *321to 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.6 The point at which a shareholder receives company water is thus not simply a corporate affair. Baird, Syrett, and Moyle each involved a change of diversion points within a company canal, but a change from a canal to a natural watercourse should be subject to the same rule. A shareholder in a mutual water corporation, like any other water user, should be able to adapt his or her use of water in response to changing economic arid social conditions, since otherwise he or she will lose the water right.
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., 617 P.2d 375 (Utah 1980). Similarly, a shareholder may not compel the corporation to install devices to measure the amount of water each shareholder receives, at least where the shareholder fails to demonstrate that he or she has been receiving less than his or her fair share of water. Id. at 379; Yardley v. Long Canal Co., 111 Utah 247, 177 P.2d 530 (1947). However, should the company decide to install such devices, it may compel all shareholders to pay the cost. Big Cottonwood Tanner Ditch Co. v. Kay, 108 Utah 110, 157 P.2d 795, 799 (1945).
East Jordan relies on Park v. Alta Ditch & Canal Co., 23 Utah 2d 86, 458 P.2d 625 (1969), for the proposition that the company’s duty is to protect all shareholders from the whims of an individual shareholder. Under its reasoning, the company must give its approval to any change. However, Park is easily distinguishable. In Park, the company had entered into an agreement in which it traded its rights to water from Alta Spring for a greater quantity of water from Deer Creek Reservoir plus cash. A shareholder sued to stop the deal, arguing that he had an absolute right to the particular water of Alta Spring and that the corporation had no authority to *322divest him of that right. The court disagreed, finding that the contracts at issue did not amount to a conveyance of the plaintiffs water: “The agreements in question here are not in essence a conveying away of water; nor do they deprive plaintiff of his water.” 458 P.2d at 627.
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., 205 Cal. 54, 269 P. 915, 921 (1928) (asserting without analysis that “it is too plain for argument” that allowing shareholder changes would lead to “inextricable discord and confusion”). As the majority acknowledges, however, shareholders in Colorado have been able to make changes in their points of diversion since at least 1907, Wadsworth Ditch Co. v. Brown, 39 Colo. 57, 88 P. 1060 (1907), and nothing suggests that disaster has resulted. Indeed, a recent study reveals that mutual water companies still “dominate the water market in Colorado.” Timothy D. Tregarthen, Water in Colorado: Fear and Loathing of the Marketplace, in Water Rights: Scarce Resource Allocation, Bureaucracy, and the Environment 119, 131 (Terry L. Anderson ed., 1983); see also Barton H. Thompson, Jr., Institutional Perspectives on Water Policy and Markets, 81 Cal.L.Rev. 671, 688 table 2 (1993) [hereinafter Thompson]. Further, the Colorado Supreme Court has reaffirmed its rule as recently as 1984. See Great Western Sugar v. Jackson Lake Reservoir, 681 P.2d 484 (Colo.1984). If “inextricable discord and confusion” were such an obvious result of allowing shareholders to make changes in their own points of diversion, certainly there would have been some sort of legislative response or judicial retrenchment in Colorado in the last eighty-five years.7
The engineer’s order does not interfere with East Jordan’s ability to “manage” the company water supply.8 The order provides that both East Jordan and the Utah Lake and Jordan River commissioner have the right to inspect Payson’s meter to ensure that the city does not take more than its share of water. It also provides that Payson’s stock will remain liable for assessment to maintain East Jordan’s canal and other company assets. East Jordan would still be able to sue in the name of its shareholders, object to claims that may impair its vested rights, and enter into exchange agreements it feels are in the best interests of the company. If there is a water shortage, East Jordan may limit the *323amount of water Payson takes through its well in the same proportion as the other shareholders. If Payson does not use its allotment, the water would be available to other shareholders, just as it would be if Payson were taking its water from the company canal. Payson would still be a shareholder in East Jordan, and East Jordan would still be the legal owner of the water rights. The only difference is that Payson would take water from its own well rather than from the company canal.9
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,10 and there is not enough water available to meet the increasing demands in many parts of the state.11 While in the past these concerns have been addressed by the construction of dams and large-scale water diversions, such projects are no longer as economically or politically feasible as they once were.12 As the demand for water approaches the supply, the natural solution will be to seek transfers of water rights. Commentators agree that agricultural users are the most likely sources of water rights for transfer.13
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 *324more economically attractive than any other option. But by refusing to allow shareholders to change their points of diversion, the majority increases the cost of these transactions, perhaps to the point of making them prohibitive.
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.14 I also believe that some protection should be provided for third parties affected by large-scale water transfers. However, the only interest served by the holding in this case is East Jordan’s desire to have the water flow through its canal. Further, area-of-origin protections and other concerns implicated by large-scale water transfers should be handled by some sort of governmental entity rather than by a private corporation pursuing its own goals.15
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.

. 80 P.2d at 935.

. 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, 17 Utah 2d 292, 409 P.2d 970, 972 (1966), and Swasey v. Rocky Point Ditch Co., 617 P.2d 375, 379 (Utah 1980).

. 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., 642 P.2d 501, 506-09 (Colo.1982) (upholding bylaw ’ imposing "reasonable limitations" upon shareholder’s right to change point of diversion).

. 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, 788 P.2d 497, 502 (Utah 1988) (per curiam).

. 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.