Water bank applications

The Utah Water Banking Act recognizes two forms of leasing arrangements eligible to be approved by the Board of Water Resources as a Utah water bank: a contract water bank and a statutory water bank. The board approves applications that are deemed complete and requires certain annual reporting requirements.

Please follow the guidelines provided for each type of application as you complete it. These materials are intended to be used in conjunction with the general Water Marketing Strategies and resources.

Contract water bank materials

A contract water bank may be a good fit where there is a specific need for water and a discreet set of parties who are able to meet that need. 

Most water leasing in Utah currently occurs by contract. Contract water banks are not intended to replace or supersede that activity, but to give those interested in leasing water an additional option and be extended the benefits of the Water Banking Act. 

Most of the activity in creating a contract water bank will occur at the contract drafting stage and involve the parties negotiating key terms, like how to set a price for water, when to let other parties know water is available, who will administer the leasing process and when distribution of water will occur. 

An application to be approved as a contract water bank is relatively straightforward. The applicant, which must be a public entity, must fill out the required contract water bank application form and provide a copy of the leasing contract signed by all of the participating parties. It is critical that interested applicants spend the time and resources to negotiate a water lease prior to applying to become a contract water bank.

Statutory water bank materials

Statutory water banks may be a good fit in areas with a lot of existing leasing activity or in areas that want to aggregate many smaller pieces of water. A successful statutory water bank will likely require a “champion” to shepherd the creation and approval process. 

A statutory water bank acts as a “middle man” or a common marketplace that brings together unknown parties interested in water leasing. Those who have water and want to find a lessor can place water in the statutory bank. Those who do not have water but want water can lease it from the bank. A statutory water bank could be a simple local Bulletin Board letting individuals advertise and seek water for lease or could be very sophisticated and help users complete leasing agreements through the bank. 

Under the right conditions a statutory water bank could be very useful to the local area. However, it may take more work and resources than other water marketing methods. Creating a statutory water bank may involve many different parties, so it is critical to understand what needs to be done and establish  who will do it. Below are resources designed to help potential participants familiarize themselves with the statutory water bank requirements and assess expertise, capacity and interest. 

Once the structure of a statutory water bank is set up, if the bank intends to oversee leasing through itself, there may be a secondary set of activities similar to those undertaken for the contract bank to create bank leasing contracts that set the terms and conditions for the actual leasing of water.

A statutory water bank application is more robust than the contract water bank application. Since a statutory water bank is intended to work with a larger group of currently unknown parties, it is imperative that the public know the specifics for how the statutory water bank will operate. It is intended that much of the substance needed to complete a statutory water bank application will be derived from the organization’s governance documents.