Two advocacy organizations filed a lawsuit Tuesday, Feb. 10 in Utah’s 7th Judicial District Court seeking to overturn the state’s new “preliminary municipality” law and invalidate the certification of the proposed Echo Canyon development southwest of Moab, formerly known as the Kane Creek development.
Plaintiffs argue the law unconstitutionally shifts zoning and land-use authority from elected county officials to a governing board largely appointed by private landowners, creating what they describe as a form of municipal power that lacks voter accountability and grants special legal privileges to developers.
The complaint was filed by Friends of the Abajos, doing business as Kane Creek Development Watch, and the environmental nonprofit Living Rivers. It names Utah Lt. Gov. Deidre M. Henderson in her official capacity, the project’s developer Kane Creek Preservation and Development LLC, the Echo Canyon preliminary municipality and developer Craig Weston — both individually and as incorporation sponsor and governing-board chair — as defendants.
In a statement, the lieutenant governor’s office said it “typically does not comment on pending litigation.”
Kane Creek Preservation & Development, LLC said in a written statement sent in the late afternoon of Feb. 12 that it is reviewing the lawsuit with legal counsel, that the project’s status remains unchanged and that it remains “focused on the responsible development of private property in accordance with state law.”
“The project has undergone extensive regulatory review and complies with all applicable requirements of SB 258 and other governing laws,” the company’s statement reads.
Senate Bill 258, a 2024 Utah law that created a pathway for large developments on unincorporated land to form what the state calls a “preliminary municipality,” is at the center of the case. Echo Canyon, a proposed 176-acre mixed-use development near the Colorado River in the Kane Creek canyon corridor southwest of Moab, became the first project in Utah to receive that designation last June. The most recent project plans call for roughly 478 housing units, 102 overnight accommodations and about 67,000 square feet of commercial space.
Echo Canyon is not the only development to seek preliminary-municipality status. Projects in Summit, Morgan and Kane counties have also applied under SB258.
Under SB258, qualifying landowners may petition the Utah Lieutenant Governor’s Office to establish a transitional governing entity with authority to adopt zoning and certain infrastructure decisions within project boundaries while pursuing possible incorporation as a town. The entity cannot levy taxes and must rely on private funding, but it may regulate land use during the transition period.
A preliminary municipality is governed by a five-member board typically composed of four landowner-affiliated members and one county appointee — in Echo Canyon’s case, Grand County Commission Chair Melodie McCandless. The status can last up to six years, or four years after the first certificate of occupancy is issued, whichever comes first.
To fully incorporate, the area must reach 100 permanent residents and then hold an election in which voters inside the boundaries decide whether to form a town and elect officials. If those thresholds are not met, authority returns to the county.
In a statement announcing the lawsuit, Kane Creek Development Watch said the statute allows a developer to form an unelected municipal government with zoning authority while bypassing county land-use approvals.
“This law appears to be intended specifically for Echo Canyon,” Laura Long of Kane Creek Development Watch said in the statement. “The project faced strong local public opposition and major obstacles under county review. SB258 sidesteps local land-use laws and cuts residents out of the process.”
The plaintiffs contend SB258 violates multiple provisions of the Utah Constitution, including prohibitions on “special laws,” requirements that statutes operate uniformly and limits on delegating governmental authority to unelected commissions. They argue the framework allows creation of a governing entity before any residents exist, applies only in certain lower-population counties and permits board members with financial interests in a development to exercise municipal authority.
The lawsuit further alleges the law reduces residents’ ability to petition elected officials for redress of grievances because land-use decisions shift from county government to a developer-appointed board. Plaintiffs also argue the statute removes traditional incorporation safeguards such as elections and direct voter oversight, creating what they describe as a parallel form of municipal governance outside standard democratic processes.
Kane Creek Preservation & Development also described the filing as the latest in a series of regulatory and legal challenges brought by the same groups, stating that prior disputes had gone through county and independent review processes.
“While we respect the right of individuals to pursue legal remedies, repeated challenges and litigation does not alter the underlying property rights or the lawful approvals already granted,” the statement continues.
The lawsuit also references a separate, ongoing case filed last year by Living Rivers and Kane Creek Development Watch seeking a court ruling that the project’s claimed groundwater and Colorado River water rights are invalid. The plaintiffs in that case argue the rights were not put to beneficial use for years and may be subject to forfeiture under Utah law, a claim the developers dispute.
“The developer lacks valid and sufficient water rights to serve a municipality and made misleading claims to the Lieutenant Governor and feasibility study consultants about water availability,” Living Rivers founder and Colorado River Keeper John Weisheit said. “This new statute removes basic oversight in favor of a private developer seeking to avoid accountability.”
The lawsuit seeks declaratory and injunctive relief, including an order halting implementation of SB258 and voiding Echo Canyon’s certification — which would return land-use authority over the project area to Grand County — along with attorney fees and other remedies the court deems appropriate.
Former Utah Sen. Curt Bramble, sponsor of SB258, has said the legislation was necessary because some rural Utah counties were not acting in good faith with developers to address the state’s housing shortage.
“If the political subdivisions were sitting down in good faith with developers and looking to find common ground, [this legislation] probably would have never evolved,” he told The Salt Lake Tribune last June.
In Kane Creek Preservation & Development’s statement, the company wrote the “program was designed to provide clarity and consistency for large-scale projects, and we have followed that framework carefully and transparently.”
A state-commissioned feasibility study released in January 2025 found the proposed Echo Canyon could generate enough projected tax revenue to cover basic municipal service costs if the project is built as proposed. Under SB258, feasibility studies are required to assume full development occurs and do not evaluate whether a project is appropriate, environmentally sound or likely to succeed.
A public hearing held March 5 at Star Hall drew more than 230 attendees and over 30 public comments, most of which opposed the project. Speakers cited concerns about flood risk along the Colorado River corridor, infrastructure demands, housing affordability and potential financial impacts on Grand County.
This story was first published by The Times-Independent.