Title: A&B Irrigation v. 
ID Dept. of Water Resources

State: idaho

Issuer: Idaho Supreme Court (civil)

Document:

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IN THE SUPREME COURT OF THE STATE OF IDAHO 
 
Docket No. 38191/38192/38193 
 
IN THE MATTER OF DISTRIBUTION OF  
WATER TO VARIOUS WATER RIGHTS  
HELD BY OR FOR THE BENEFIT OF A&B  
IRRIGATION DISTRICT, AMERICAN  
FALLS RESERVOIR DISTRICT #2,  
BURLEY IRRIGATION DISTRICT,  
MILNER IRRIGATION DISTRICT,  
MINIDOKA IRRIGATION DISTRICT,  
NORTH SIDE CANAL COMPANY, AND  
TWIN FALLS CANAL COMPANY. 
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A&B IRRIGATION, AMERICAN FALLS  
RESERVOIR DISTRICT #2, BURLEY  
IRRIGATION DISTRICT, MILNER  
IRRIGATION DISTRICT, MINIDOKA  
IRRIGATION DISTRICT, NORTH SIDE  
CANAL COMPANY, TWIN FALLS CANAL  
COMPANY 
 
       Petitioners-Appellants, 
 
and 
 
UNITED STATES OF AMERICA, BUREAU  
OF RECLAMATION, 
 
      Petitioners-Respondents on Appeal, 
 
v. 
 
GARY SPACKMAN, in his capacity as  
Interim Director of the Idaho Department of  
Water Resources, and the IDAHO  
DEPARTMENT OF WATER RESOURCES, 
 
       Respondents-Respondents on Appeal,  
 
and 
 
IDAHO GROUND WATER  
APPROPRIATORS, INC., 
 
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Boise, June 2012 Term 
 
2013 Opinion No. 134 
 
Filed:  December 17, 2013 
 
Stephen Kenyon, Clerk 
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       Intervenor-Respondent-Cross     
       Appellant, 
 
and 
 
THE CITY OF POCATELLO, 
 
          Intervenor-Respondent-Cross  
          Appellant. 
_______________________________________                
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Appeal from the District Court of the Fifth Judicial District of the State of Idaho,   
Gooding County.  Hon. John M. Melanson, District Judge. 
 
The decision of the district court is affirmed. 
  
Barker Rosholt & Simpson, LLP, Twin Falls, Capitol Law Group, PLLC,  
Gooding and Fletcher Law Office, Burley, for appellants.  Travis Thompson 
argued. 
 
Hon. Lawrence G. Wasden, Attorney General, Boise, for respondents.  Chris 
Bromley argued. 
 
Racine, Olson, Nye, Budge & Bailey, Chtd., Pocatello, for respondent-cross-  
appellant Idaho Ground Water Appropriators.  Thomas J. Budge argued. 
 
Arthur Dean Tranmer, Pocatello and White & Jankowski, Denver, Colorado, for  
respondent-cross-appellant City of Pocatello.  Sara A. Klahn argued. 
                    _______________________________________________ 
 
HORTON, Justice. 
This is an appeal from a district court’s order on petition for judicial review from a final 
order from the Director of the Idaho Department of Water Resources (Department or IDWR). On 
appeal, the senior surface water rights holders (Surface Water Coalition or Coalition)1 challenge 
the court’s order affirming the methodology established by the Director for determining material 
injury caused by the pumping of junior groundwater rights holders (Idaho Groundwater 
Appropriators or Groundwater Appropriators). The Coalition also appeals the court’s failure to 
require the Director to issue a single final order. The Groundwater Appropriators and Intervenor 
                                                 
1 The Coalition consists of seven entities that hold surface water rights with priority dates senior to the rights of the 
Groundwater Appropriators, namely A&B Irrigation District, American Falls Reservoir District No. 2, Burley 
Irrigation District, Milner Irrigation District, Minidoka Irrigation District, North Side Canal Company and Twin 
Falls Canal Company.  
3 
 
City of Pocatello (the City) assert on cross-appeal that the proper evidentiary standard for 
determining material injury is a preponderance of the evidence, rather than clear and convincing 
evidence.  
I. FACTUAL AND PROCEDURAL BACKGROUND 
The surface and ground waters in the Snake River Basin are hydraulically connected, 
such that groundwater pumping can decrease the natural flows in the Snake River and its 
tributaries. In the 1980s, Idaho began to adjudicate water rights in the Basin in order to determine 
their nature, extent and priority. In the 1990s, Idaho began to conjunctively manage surface and 
ground water rights pursuant to rules (Conjunctive Management Rules or Rules) promulgated by 
the Department.2 In 2007, this Court rejected a facial challenge to the Rules’ constitutionality. 
Am. Falls Reservoir Dist. No. 2 v. Idaho Dep’t of Water Res., 143 Idaho 862, 154 P.3d 433 
(2007) (AFRD #2).  
This appeal arises from a January 2005 delivery call initiated by the Coalition which 
alleged that the Coalition was suffering material injury due to pumping by the Groundwater 
Appropriators. In his initial order responding to the delivery call, dated February 14, 2005, the 
Director wrote: 
 
Based upon the Idaho Constitution, Idaho Code, the conjunctive 
management Rules, and decisions by Idaho courts, . . . it is clear that injury to 
senior priority surface water rights by diversion and use of junior priority ground 
water rights occurs when diversion under the junior rights intercept a sufficient 
quantity of water to interfere with the exercise of the senior primary and 
supplemental water rights for the authorized beneficial use. Because the amount 
of water necessary for beneficial use can be less than decreed or licensed 
quantities, it is possible for a senior to receive less than the decreed or licensed 
amount, but not suffer injury. Thus, senior surface water right holders cannot 
demand that junior ground water right holders diverting water from a 
hydraulically-connected aquifer be required to make water available for diversion 
unless that water is necessary to accomplish an authorized beneficial use.  
 
 
. . . 
 
Whether the senior priority water rights held by or for the benefit of 
members of the Surface Water Coalition are injured depends in large part on the 
total supply of water needed for the beneficial uses authorized under the water 
rights held by members of the Surface Water Coalition and available from both 
natural flow and reservoir storage combined. To administer junior priority ground 
                                                 
2 For a more detailed exploration of the hydrology and history underlying the adjudication and conjunctive 
management of Idaho’s surface and groundwater, see then-Chief Justice Eismann’s opinion in Clear Springs Foods, 
Inc. v. Spackman, 150 Idaho 790, 252 P.3d 71 (2011). 
4 
 
water rights while treating the natural flow rights and storage rights of the 
members of the Surface Water Coalition separately would either: (1) lead to the 
curtailment of junior priority ground water rights, absent mitigation, when there is 
insufficient natural flow for the senior water rights held by the members of the 
Surface Water Coalition even though the reservoir space allocated to members of 
the Surface Water Coalition is full; or (2) lead to the curtailment of junior priority 
ground water rights, absent mitigation, anytime when the reservoir space allocated 
to the members of the Surface Water Coalition is not full even though the natural 
flow water rights held by members of the Surface Water Coalition were 
completely satisfied. Either outcome is wholly inconsistent with the provision for 
“full economic development of underground water resources” in Idaho Code § 
42-226 articulated as “optim[al] development” in Baker v. Ore-Ida Foods, Inc., 
95 Idaho 575, 584, 513 P.2d 627, 636 (1973). 
 
The Director initiated a contested case, ordered the Coalition members to submit certain 
information about their water rights, and stated that he would determine the extent of any injury 
after the annual issuance of April 1st release forecasts.  
On May 2, 2005, the Director issued an amended order. The amended order’s findings of 
fact contained a section titled “Water Supply Historically Available and Predicted to be 
Available in 2005.” In summary, this section reiterated the statement that material injury only 
exists if a senior water right holder lacks sufficient water to meet its authorized beneficial uses 
and that this amount may differ from the senior’s total decreed or licensed right. Working from 
this premise and “for the limited purpose of assessing reasonably likely material injury” caused 
by diversion of ground water by holders of junior water rights, the Director projected the 
minimum amount of natural flow and carryover storage water necessary for each member of the 
Coalition to meet its needs. The Director also ordered the Groundwater Appropriators to provide 
replacement water or curtail their consumptive uses.  
On May 11, 2005, the Director granted the City of Pocatello’s petition to intervene. Over 
the course of the next three years, the Director issued a series of supplemental orders that 
assessed the predicted amount of replacement water necessary for mitigation and/or retroactively 
determined the amount actually left wanting at the close of each irrigation season.3  
The third of these supplemental orders summarized the Director’s methodology for 
determining whether senior surface water right holders were likely to incur material injury as 
follows: 
                                                 
3 The seventh supplemental order is not in the record on appeal. 
5 
 
(1) Determine the minimum full water supply needed for irrigation (natural flow 
and reservoir storage releases) by the members of the Surface Water 
Coalition; 
(2) Compare the forecast as of April 1, 2005, for unregulated inflow from the 
Upper Snake River Basin for the time period of April 1, 2005, through July 
31, 2005, with historic unregulated inflow from the Upper Snake River Basin 
for the period of April 1 through July 31; 
(3) Select a year or years of similar unregulated inflow and assume that: (a) 
natural flow diversions in 2005 will be essentially the same as the natural flow 
diversion in the similar year(s); (b) water stored in the reservoirs after April 1 
in the similar year(s) added to the volume actually stored as of April 1, 2005, 
adjusted for evaporation, will be the total reservoir storage available for 
release and use in 2005; and (c) the sum of the predicted natural flow 
diversions and the predicted reservoir storage, adjusted for evaporation, 
constitutes the [sic] “the predicted 2005 water supply”; and  
(4) For each member of the Surface Water Coalition, subtract the predicted total 
water supply for 2005 from the minimum full water supply needed, and to the 
remainder add the amount of carryover storage reasonably needed assuming a 
drought year in 2006, unless the remainder is negative and the value equals or 
exceeds the reasonably needed carryover storage. The extent of the material 
injury predicted, or presumed, for each member of the Surface Water 
Coalition equaled the sum of predicted shortage from the minimum full water 
supply, if any, and the amount of predicted short fall [sic] in carryover 
storage, if any. 
 
(5) Provide a procedural framework under which the water supply needed by each 
member of the Surface Water Coalition could be increased above the 
minimum full supply assumed to be needed, up to the limits of the water 
rights held by or for the benefit of members of the Coalition, or decreased 
from the minimum full supply assumed to be needed, based on actual climatic 
and water supply conditions for 2005, and the extent of material injury 
correspondingly adjusted. 
 
(footnotes omitted). This order added the following footnote to the first paragraph: 
Water rights held by or for the benefit of members of the Surface Water 
Coalition entitle the diversion of up to the full quantities of water authorized by 
the respective rights when needed for the full beneficial use defined under the 
rights. For a variety of reasons (e.g., cropping patterns, changes in irrigation 
methods, reductions in irrigated acreage, weather, etc.) the full quantities of water 
authorized by the respective rights are often not needed, and junior priority rights 
are not subject to curtailment to provide for the differences, if any, between the 
maximum quantities of water authorized by the rights and the lesser quantities of 
water actually needed. The Director determined that 1995 was the most recent 
year that the members of the Surface Water Coalition received a water supply 
sufficient for the beneficial uses made under the respective rights and, based on 
available information, used the amounts of water diverted during the 1995 
irrigation season as measures of the quantities of water needed for current 
6 
 
conditions (herein termed “minimum full water supply”), while recognizing that 
amounts of water up to the maximum quantities authorized by the water rights 
held by or for the benefit of the Coalition could be demanded upon a showing of 
need. To date, the Surface Water Coalition has not shown such need. 
 
(underlining original).  
 
On April 29, 2008, the Department hearing officer reviewing the Director’s several 
orders issued a 68-page opinion and recommendation.4 The hearing officer recognized that the 
Director’s methodology for determining material injury “departs from the practice of recognizing 
a call at the level of the licenses or decrees, understanding that if less water is needed less will be 
delivered.” The hearing officer observed: 
 
Inherent in the application of the minimum full supply is the assumption 
that, if it accurately defines need, use of water above that amount would not be 
applied to a beneficial use and would constitute waste. This strains against the 
assumption that the senior users are entitled to the full extent of their . . . licensed 
or decreed rights which at some point has been determined to be an amount they 
could beneficially use. The hedge built into the concept of minimum full supply 
as initially outlined in the May 2, 2005 Order is that the minimum full supply is a 
base that can be raised if more is needed to satisfy crop and storage requirements. 
Inherent in the prospect of using a baseline approach in ground water to surface 
water use is the possibility that it might translate back to the surface to surface 
administration and change the historical practice. 
 
Nonetheless, the hearing officer concluded that “[t]he attempt to project the amount of water that 
is necessary for the members of [the Coalition] to fully meet crop needs within the licensed or 
decreed amounts is an acceptable approach to conjunctive management . . . .”  
Noting that “[t]he use of the term ‘minimum full supply’ has become a lightning rod of 
discontent of all parties,” the hearing officer concluded that “there have been applications of the 
concept of a minimum full supply that should be modified if the use of the protocol is to be 
retained,” “[t]here must be adjustments as conditions develop if any baseline supply concept is to 
be used,” “[u]sing the minimum full supply as a fixed amount in effect readjudicates a water 
right outside the processes of the SRBA,” and “it is time for the Department to move to further 
analysis to meet the goal of the minimum full supply but with the benefit of the extended 
information and analysis offered by the parties and available to its own staff.” The hearing 
officer explained that “[t]he concept of a baseline is that it is adjustable as weather conditions or 
practices change, and that those adjustments will occur in an orderly, understood protocol.” The 
                                                 
4 Retired Chief Justice Gerald F. Schroeder served as Department’s hearing officer. As is characteristic of the 
opinions of its author, the opinion and recommendation was thorough and insightful.  
7 
 
hearing officer made several recommendations as to how to improve the baseline methodology 
by making it more responsive to actual conditions.  
 
The hearing officer determined that the Director had acted reasonably by ordering 
curtailment or mitigation sufficient to meet only one year, rather than multiple years, of the 
Coalition’s carryover storage needs. The hearing officer recommended that replacement water 
plans ordered by the Director comply with the procedural steps necessary for approval of 
mitigation plans, as set forth in the Conjunctive Management Rules. Finally, the hearing officer 
concluded that the Director had erred by accepting Twin Falls Canal Company’s full headgate 
delivery as being 3/4 of a miner’s inch per acre, because it had been established by a prior 
judicial determination to be 5/8 of a miner’s inch.  
On September 5, 2008, the Director issued his Final Order Regarding the Surface Water 
Coalition Delivery Call (Final Order). The Director adopted most of the hearing officer’s 
findings and recommendations, and offered additional comment only as to those issues with 
which he disagreed or felt that additional explanation was necessary. The Director did not 
discuss the hearing officer’s recommendation regarding the measure of Twin Falls Canal 
Company’s full headgate delivery.  
In the Final Order, the Director substituted the term for “reasonable in-season demand” 
for “minimum full supply” and stated that “[b]ecause of the need for ongoing administration, the 
Director will issue a separate final order before the end of 2008 detailing his approach for 
predicting material injury to reasonable in-season demand and reasonable carryover for the 2009 
irrigation season.” Although the Director agreed with the hearing officer that mitigation plans are 
a useful tool, he concluded that replacement water plans should not be forced to comply with the 
procedural requirements applicable to mitigation plans. The Director reasoned that approval as a 
mitigation plan would require curtailment of junior ground water users without a hearing because 
they could not formulate a mitigation plan until they knew how much water would be owed to 
the Coalition. The Director concluded that a formal mitigation plan should be submitted after a 
record has been developed through the hearing process, but that “[a]uthorizing replacement 
water plans ensures that the senior water user making the delivery call is made whole during the 
pendency of the proceeding and the junior is not irreparably harmed prior to a hearing on the 
call.” The Director also concluded that “replacement water for predicted shortages to reasonable 
8 
 
carryover should be provided in the season in which the water can be put to beneficial use, not 
the season before.”  
Thereafter, the parties filed petitions for judicial review. The Director did not issue the 
promised separate order addressing the refined material injury methodology before the district 
court engaged in judicial review of the Final Order.5  
On July 24, 2009, the district court issued its Order on Petition for Judicial Review. The 
district court held that the Director erred in four respects. First, the district court found no 
distinction between replacement water plans and mitigation plans and observed that the use of 
replacement water plans permitted the Rules governing mitigation plans to be circumvented. 
Second, the district court held that the Director abused his discretion by categorically limiting 
senior water right holders’ rights to reasonable carryover storage to one year. Third, the district 
court determined that that the Director had exceeded his authority by determining that full 
headgate delivery for the Twin Falls Canal Company should be calculated at 5/8 of a miner’s 
inch per acre instead of 3/4 of a miner’s inch. Finally, the district court concluded that the 
Director abused his discretion by issuing two distinct final orders rather than a single final order 
that resolved all of the issues. The district court upheld the Director’s adoption of a baseline 
methodology for determining material injury. Thus, the district court affirmed in part, reversed in 
part, and remanded the matter to the Department for further proceedings.  
Several parties filed petitions for rehearing of the district court’s order. In its briefing and 
at oral argument on the petitions for rehearing, the Department advised the district court that it 
could generate its revised baseline methodology for determining material injury based upon the 
existing record. As a result, the court decided to stay issuance of its final order on the petitions 
for rehearing. The district court ordered the Director to “issue a Final Order determining 
material injury to reasonable in-season demand and reasonable carryover” and notified the 
parties that they had seven days to object to the court’s order holding its final order in abeyance.  
On April 7, 2010, the Director issued his Final Order Regarding Methodology for 
Determining Material Injury to Reasonable In-Season Demand and Reasonable Carryover. This 
order set forth a refined methodology for determining material injury, starting from a predictive 
baseline of the senior water right holders’ actual needs. The order also noted that the Director 
                                                 
5 The district court noted that the Director had issued an order regarding the protocol for material injury on June 30, 
2009, but that order was not part of the record on judicial review. 
9 
 
had accepted the hearing officer’s recommendation that the full headgate delivery for Twin Falls 
Canal Company be 5/8 of a miner’s inch per acre rather than 3/4 of a miner’s inch.  
The district court subsequently lifted the stay on the petitions for rehearing and entered an 
order on August 23, 2010, to the effect that, although the Director had initially abused his 
discretion by failing to determine a methodology for determining material injury to reasonable 
in-season demand and reasonable carryover, the Director had complied with the court’s order on 
remand by issuing a methodology order. The district court further concluded that, although the 
Director had abused his discretion by failing to comply with the Rules’ prescribed procedures for 
adoption of mitigation plans, there was no practical remedy that could be afforded. The court 
then remanded the matter to the Director for application of “the ‘clear and convincing’ 
evidentiary standard and appropriate burdens of proof when determining full headgate delivery 
for the Twin Falls Canal Company water right . . . .” The court subsequently entered an amended 
order on the petitions for rehearing. Therein, the court slightly modified the holding of its 
original order on rehearing, instructing that: 
While the Court has ruled that the Director abused his discretion and 
exceeded his authority by failing to follow procedural steps for mitigation plans as 
set forth in the [Rules], and for failing to apply the correct presumptions and 
burden of proof in making the determination under the [Rules] that [Twin Falls 
Canal Company] was entitled to less than the quantity recommended, there is no 
practical remedy to cure those errors at this point in the proceedings, and the 
Director has, upon remand, calculated 3/4 inch per acre as [Twin Falls Canal 
Company’s] full headgate delivery. 
 
The court otherwise affirmed the Director’s order of September 5, 2008.  
The Coalition appeals the district court’s affirmance of the Director’s baseline 
methodology for determining material injury, as well as the failure to order the Director to issue 
a single final order resolving all contested issues. The Groundwater Appropriators and the City 
contend that preponderance of the evidence is the appropriate evidentiary standard with regard to 
determinations of material injury, and thus appeal the district court’s determination that such 
determination should reflect the clear and convincing evidence standard.  
II. ISSUES ON APPEAL 
1. Whether the Director may utilize a baseline methodology—a methodology based upon 
the senior water right holder’s projected need in considering whether that right holder has 
been materially injured. 
10 
 
2. Whether the Conjunctive Management Rules permit out-of-priority diversions without 
requiring such diversions be explained and justified within a properly enacted mitigation 
plan. 
3. Whether the district court erred by permitting the Director to bifurcate his final order. 
4. Whether the clear and convincing evidence standard or the preponderance of the evidence 
should be applied to the determination of material injury. 
III. STANDARD OF REVIEW 
Idaho Code § 67–5279 governs judicial review of agency action. Accordingly, a district 
court:  
must affirm the agency unless it finds that the agency’s findings, inferences, 
conclusions, or decisions are: “(a) in violation of constitutional or statutory 
provisions; (b) in excess of the statutory authority of the agency; (c) made upon 
unlawful procedure; (d) not supported by substantial evidence on the record as a 
whole; or (e) arbitrary, capricious, or an abuse of discretion.”  
 
Clear Springs Foods, Inc. v. Spackman, 150 Idaho 790, 796, 252 P.3d 71, 77 (2011) (quoting 
I.C. § 67–5279(3)). The “agency action shall be affirmed unless substantial rights of the 
appellant have been prejudiced.” I.C. § 67-5279(4). The district court’s review is limited to those 
issues raised before the administrative tribunal and those the tribunal lacked the authority to 
decide. Clear Springs Foods, Inc., 150 Idaho at 797, 252 P.3d at 78 (quoting Johnson v. Blaine 
Cnty., 146 Idaho 916, 920, 204 P.3d 1127, 1131 (2009)).  
 
On appeal from a district court’s review of agency action, this Court reviews the district 
court’s decision to determine whether the issues were correctly decided. Id. (citing Wright v. Bd. 
of Psychological Examiners, 148 Idaho 542, 544-45, 224 P.3d 1131, 1133-34 (2010)). Although 
the parties may have raised many issues during the administrative proceedings, this Court will 
only consider those issues raised before the district court. Id. (citing Marcia T. Turner, L.L.C. v. 
City of Twin Falls, 144 Idaho 203, 208, 159 P.3d 840, 845 (2007)). 
IV. ANALYSIS 
A. The Director may employ a baseline methodology as a starting point for considering 
material injury.  
 
On judicial review, the district court held that “[t]he Director did not abuse discretion or 
act outside his authority in utilizing a ‘minimum full supply’ or ‘reasonable in-season demand’ 
baseline for determining material injury.” The court described the Director’s methodology as 
follows:  
11 
 
In determining material injury to senior rights the Director considered a 
“baseline” quantity independent of the decreed or licensed quantity. The baseline 
quantity represented the amount of water predicted from natural flow and storage 
needed to meet in-season irrigation requirements and reasonable-carryover. The 
Director then determined material injury based on shortfalls to the predicted 
baseline as opposed to the decreed or licensed quantities. 
 
The district court next responded to the Coalition’s allegations that the Director’s methodology 
was improper. 
On first impression it would appear that the use of such a baseline 
constitutes a re-adjudication of a decreed or licensed water right. As stated by the 
Hearing Officer “[t]he logic of [the Coalition] in objecting to the Director’s use of 
a minimum full supply is difficult to avoid.” However, on closer examination the 
use of baseline is a necessary result of the Director implementing the conditions 
imposed by the [Rules] with respect to regulating junior rights to protect senior 
storage rights. Put differently, senior right holders are authorized to divert and 
store up to the full decreed or licensed quantities of their storage rights, but in 
times of shortage juniors will only be regulated or required to provide mitigation 
subject to the material injury factors set forth in [Rule] 042. Rule 042 of the 
[Rules] lists a number of factors the Director is to consider in determining 
material injury to senior rights. [Rule] 042.01a-h. As this Court concluded 
previously, the total combined decreed quantity of the natural flow and storage 
rights can exceed the amount of water necessary to satisfy in-season demands plus 
reasonable carry-over. Simply put, pursuant to these factors a finding of material 
injury requires more than shortfalls to the decreed or licensed quantity of the 
senior right. Although the [Rules] do not expressly provide for the use of a 
“baseline” or other methodology, the Hearing Officer concluded that: “Whether 
one starts at the full amount of the licensed or decreed right and works down 
when the full amount is not needed or starts at base and works up according to 
need, the end results should be the same.” Ultimately the Hearing Officer 
determined that the use of a baseline estimate to represent predicted in-season 
irrigation needs was acceptable provided the baseline was adjustable to account 
for weather variations and that the process satisfied certain other enumerated 
conditions. This Court affirms the reasoning of the Hearing Officer on this issue.  
 
(citations to record omitted).  
 
On appeal, the Coalition asserts that the district court erred in affirming the Director’s 
baseline methodology. The Coalition argues that any methodology founded upon the prediction 
of the minimum amount of water actually necessary to satisfy a senior water right holder’s 
irrigation and storage needs is contrary to the doctrine of prior appropriation as established by 
Idaho constitutional, statutory, and case law. A decreed or licensed water right, contends the 
Coalition, creates a presumption that the full extent of the right has already been defined by its 
beneficial use. The Coalition further argues that junior water right holders bear the burden of 
12 
 
proving any defenses against the seniors’ rights. In effect, the Coalition asserts, the Director’s 
methodology created a de facto defense for junior water right holders and forces senior water 
right holders to re-prove their decreed or licensed rights. The Groundwater Appropriators, 
Department and the City advance a variety of responsive arguments.  
1. The propriety of a baseline methodology is properly before the Court. 
To begin, the Groundwater Appropriators and Department each contend that this issue is 
moot because the Director’s final order described a modified methodology referred to as 
“reasonable in-season demand” rather than “minimum full supply.” In a similar vein, the 
Groundwater Appropriators also argue that, although the Coalition frames its argument on appeal 
as a challenge to any methodology that incorporates a predictive baseline analysis of senior water 
rights holders’ needs, the Coalition’s request for judicial review and the present appeal are 
specifically limited to the Director’s minimum full supply methodology and a ruling from this 
Court beyond that narrow scope would constitute an impermissible advisory opinion. They 
contend that the propriety of the Director’s modified methodology is not properly before this 
Court on appeal because it was created subsequent to the district court’s order on petition for 
judicial review and is currently subject to judicial review by the district court.  
These arguments are based upon the premise that the district court’s judicial review was 
limited to the Director’s original iteration of the minimum full supply methodology. As noted 
earlier, this Court may only consider those issues raised before the district court. Clear Springs 
Foods, Inc., 150 Idaho at 797, 252 P.3d at 78. It is true that the Director entered his final order 
regarding the modified methodology more than eight months after the court’s entry of its order 
on petition for judicial review. Since the district court did not review this final methodology 
order, the findings of fact that shape that methodology and any modifications to the methodology 
are not properly before this Court.  
However, the district court did not merely address the minimum full supply methodology. 
Rather, it adopted the hearing officer’s conclusion that “the use of a baseline estimate to 
represent predicted in-season irrigation needs was acceptable provided the baseline was 
adjustable to account for weather variations and that the process satisfied certain other 
enumerated conditions.” Thus, the district court reviewed, as a matter of law, the propriety of 
predicting material injury based upon shortfalls to a chosen baseline quantum of senior water 
rights holders’ in-season irrigation and reasonable carryover needs. As previously stated, the 
13 
 
nuances of the final methodology order are not properly before this Court.6 Id. However, given 
the legal issue that the district court decided, we may determine whether and for what purposes a 
baseline methodology is consistent with Idaho law. The Court’s consideration and resolution of 
this question will resolve a real and substantial controversy; therefore, the issue is not moot and 
an opinion resolving the matter will not be advisory. See Fenn v. Noah, 142 Idaho 775, 779, 133 
P.3d 1240, 1244 (2006); State v. Rhoades, 119 Idaho 594, 597-98, 809 P.2d 455, 458-59 (1991). 
2.  The Director may, consistent with Idaho law, employ a baseline methodology for 
management of water resources and as a starting point in administration proceedings. 
Although the parties direct their briefing primarily to the issue of utilization of the 
baseline methodology in the context of determining a water call, as recognized by the hearing 
officer and district court, the baseline is used also as a predictive tool in preparing the Director’s 
pre-season plan for allocation of water. That is, the Director has used it both for management of 
the resource and in determining material injury in the context of a water call. With regard to the 
usage of the baseline in the management context, the Director is required to observe the well-
established legal principles of Idaho’s prior appropriation doctrine. Additionally, when utilizing 
the baseline in the administration context, the Director must abide by established evidentiary 
standards, presumptions, and burdens of proof. 
It bears mentioning at this point that this is not a water rights case. By virtue of the Snake 
River Basin Adjudication, the water rights involved in this proceeding are well known and 
established. This is a water management case wherein the management  authority and discretion 
of the Director are at issue. However, both management and administration must be conducted in 
accordance with the basic tenets of the prior appropriation doctrine. 
The prior appropriation doctrine is comprised of two bedrock principles―that the first 
appropriator in time is the first in right and that water must be placed to a beneficial use. Article 
XV, section 3 of the Idaho Constitution provides that “[t]he right to divert and appropriate the 
unappropriated waters of any natural stream to beneficial uses, shall never be denied . . . . 
Priority of appropriation shall give the better right as between those using the water . . . .” These 
two doctrines encouraged settlers to divert surface water from its natural course and put it to 
                                                 
6 Woven throughout the parties’ briefing on appeal are attacks upon the sufficiency of the evidence supporting the 
findings of the Director and the district court. The challenged findings are central to the final iteration of the 
Director’s methodology for determining material injury. Since the district court’s order on petition for judicial 
review, which this Court now reviews on appeal, did not address the Director’s final order on methodology, the 
factual basis underlying the final methodology order is not properly before this Court at this time.  
14 
 
beneficial use, thus leading to the development of Idaho’s arid landscape. Pocatello v. State, 145 
Idaho 497, 502, 180 P.3d 1048, 1053 (2008). This Court long ago held that prior appropriation 
also governs interests in groundwater. Bower v. Moorman, 27 Idaho 162, 181, 147 P. 496, 502 
(1915) (citing Le Quime v. Chambers, 15 Idaho 405, 98 P. 415 (1908)).  
The concept that beneficial use acts as a measure and limit upon the extent of a water 
right is a consistent theme in Idaho water law. E.g., I.C. § 42-220 (“neither [a] licensee nor 
anyone claiming a right under [a] decree, shall at any time be entitled to the use of more water 
than can be beneficially applied on the lands for the benefit of which such right may have been 
confirmed.”); AFRD #2, 143 Idaho 862, 880, 154 P.3d 433, 451 (2007) (“Neither the Idaho 
Constitution, nor statutes, permit irrigation districts and individual water right holders to waste 
water or unnecessarily hoard it without putting it to some beneficial use.”); Wash. State Sugar 
Co. v. Goodrich, 27 Idaho 26, 44, 147 P. 1073, 1079 (1915) (“It is the settled law of this state 
that no person can, by virtue of a prior appropriation, claim or hold more water than is necessary 
for the purpose of the appropriation, and the amount of water necessary for the purpose of 
irrigation of the lands in question and the condition of the land to be irrigated should be taken 
into consideration.”); Conant v. Jones, 3 Idaho (3 Hasb.) 606, 612-13, 32 P. 250, 251 (1893) 
(prior appropriator may ultimately claim entirety of his original appropriation, but he is only 
entitled to the amount of water he actually puts to beneficial use during the time it takes him to 
prepare his land for cultivation).  
This case illustrates the tension between the first in time and beneficial use aspects of the 
prior appropriation doctrine. In the context of developing a water allocation plan for an up-
coming irrigation season, the Idaho Legislature has authorized the Director “to adopt rules and 
regulations for the distribution of water from the streams, rivers, lakes, ground water, and other 
natural water resources as shall be necessary to carry out the laws in accordance with the 
priorities of the rights of the users thereof.” I.C. § 42-603. The Director has done so in the 
Conjunctive Management Rules (CM Rules), which were approved by the Legislature and 
became effective on October 7, 1994.7  In AFRD #2, after discussing and upholding the CM 
                                                 
7 Existing law was incorporated into the CM Rules, as noted by the Court in AFRD #2: 
CM Rule 20.02 provides that: “[T]hese rules acknowledge all elements of the prior appropriation 
doctrine as established by Idaho law.” “Idaho law,” as defined by CM Rule 10.12, means “[T]he 
constitution, statutes, administrative rules and case law of Idaho.” Thus, the Rules incorporate 
Idaho law by reference and to the extent the Constitution, statutes and case law have identified the 
15 
 
Rules, this Court recognized the critical role of the Director in managing the water resource to 
accommodate both the first in time and beneficial use aspects: “Somewhere between the absolute 
right to use a decreed water right and an obligation not to waste it and to protect the public’s 
interest in this valuable commodity, lies an area for the exercise of direction by the Director.” 
AFRD #2, 143 Idaho at 880, 154 P.3d at 451. The authority of the Director to prepare and 
implement a water allocation plan as part of his management responsibility has not been 
challenged by any party in this proceeding, perhaps in recognition of the fact that an 
interconnected system of ground and surface water as complicated as the Snake River Basin, 
with as many variables, moving parts, and imponderables that present themselves during any 
particular irrigation season, simply cannot be managed without a great deal of prior analysis and 
planning toward determining the proper apportionment of water to and among the various water 
right holders according to their priority. The use of a baseline methodology in this context is, 
therefore, not inconsistent with Idaho law. 
The more difficult issue lies in the use of a baseline in the administration context. In this 
case, the Director used the baseline methodology, both as a starting point for consideration of the 
Coalition’s call for administration and in determining the issue of material injury. The hearing 
officer approved the Director’s methodology on both counts and the district court affirmed. The 
hearing officer reasoned that (1) it is presumed that a senior water right holder is entitled to its 
decreed or licensed amount of water; (2) a senior water right holder that alleges material injury 
must do so under oath, along with a description of its water right and the facts upon which it 
bases its allegation; and (3) the Coalition provided evidence of its material injury. The hearing 
officer next expressly recognized that “[t]he process utilized in this case deviated from that 
anticipated by the Supreme Court” in AFRD #2, because the burden did not shift to the junior 
ground water users to show a defense to the Coalition’s delivery call.8 The hearing officer then 
quoted the Director’s testimony that the Director believed that the initial burden of determining 
the extent of material injury should not rest with junior water rights holders, but rather with 
                                                                                                                                                             
proper presumptions, burdens of proof, evidentiary standards and time parameters, those are a part 
of the CM Rules. 
143 Idaho at 873, 154 P.3d at 444. 
8 The hearing officer also pointed out that the “Director did not have the benefit of AFRD #2 when [the Coalition] 
made its request for administration in this case.”  
16 
 
IDWR. The Director reasoned that, like the senior water right holders, the junior right holders 
possessed decreed rights such that he: 
didn’t think it was appropriate to say, okay, prove that you’re not causing any 
injury . . . . 
. . .  
And so in developing this May 2nd Order, I tried to develop a process under 
which the State would take the initial burden of making these determinations . . . .  
. . .  
And during that hearing process either side of this . . . could have and probably 
would have brought forward information about why 1995 was or wasn’t a good 
year to use for the minimum full supply. And certainly, in that process I would 
have been open to considering other methodologies, other criteria. But I thought it 
was important that the State take the first step to try to bring some resolution to 
this. The idea was that doing it this way might bring the two sides closer together. 
 
Although, with these statements, the Director expressly rejected the concept of placing 
the burden of proof upon junior water right holders, the hearing officer held that the Director’s 
methodology “makes sense and is consistent with the construction of the Conjunctive 
Management Rules,” although the methodology failed to anticipate the allocation of the burden 
of proof we articulated in AFRD #2. Recognizing the Director’s authority and responsibility to 
investigate claims when delivery calls are made, the hearing officer reasoned that “[w]hether the 
Director approached the case applying the legal burdens established in AFRD #2 or not, the 
Director had the authority and the responsibility to develop the facts upon which a well-informed 
decision could be made and to make a decision from the best information developed.” Although 
the hearing officer stated that “[the Groundwater Users] and [the City] have the burden of 
establishing defenses to [the Coalition’s] claims,” it concluded that “[t]he parties may rely on 
facts developed by the Director,” and affirmed application of the Director’s baseline 
methodology.                                                                                                                                                              
 
In evaluating the Director’s use of the baseline in considering and determining the issue 
of material injury, and whether that procedure transgressed provisions of Idaho law, it is 
appropriate to look for guidance to AFRD #2. There, we stated: 
CM Rule 42 lists factors “the Director may consider in determining whether the 
holders of water rights are suffering material injury and using water efficiently 
and without waste. . . .” IDAPA 37.03.11.42.01 Such factors include the system, 
diversion, and conveyance efficiency, the method of irrigation water application 
and alternate reasonable means of diversion. Id. American Falls argues the 
Director is not authorized to consider such factors before administering water 
rights; rather, the Director is “required to deliver the full quantity of decreed 
17 
 
senior water rights according to their priority” rather than partake in this re-
evaluation. . . . 
 
Clearly, even as acknowledged by the district court, the Director may consider 
factors such as those listed above in water rights administration. Specifically, the 
Director “has the duty and authority” to consider circumstances when the water 
user is not irrigating the full number of acres decreed under the water right. If this 
Court were to rule the Director lacks the power in a delivery call to evaluate 
whether the senior is putting the water to beneficial use, we would be ignoring the 
constitutional requirement that priority over water be extended only to those using 
the water. 
143 Idaho at 876, 154 P.3d at 447. We went on to note that the Director has discretionary 
authority in a water management case that is not available to him in a water rights case: 
“[r]easonableness is not an element of a water right; thus, evaluation of whether a diversion is 
reasonable in the administration context should not be deemed a re-adjudication.” Id. at 877, 154 
P.3d at 448.  
 
While recognizing the Director’s authority to evaluate the issue of beneficial use in the 
administration context, we stated: 
While there is no question that some information is relevant and necessary to the 
Director’s determination of how best to respond to a delivery call, the burden is 
not on the senior water rights holder to re-prove an adjudicated right. The 
presumption under Idaho law is that the senior is entitled to his decreed water 
right, but there certainly may be some post-adjudication factors which are relevant 
to determination of how much water is actually needed. The Rules may not be 
applied in such a way as to force the senior to demonstrate an entitlement to the 
water in the first place; that is presumed by the filing of a petition containing 
information about the decreed right. The Rules do give the Director the tools by 
which to determine “how the various ground and surface water sources are 
interconnected, and how, when, where and to what extent the diversion and use of 
water from one source impacts [others]. Once the initial determination is made 
that material injury is occurring or will occur, the junior then bears the burden of 
proving that the call would be futile[,] or to challenge, in some other 
constitutionally permissible way, the senior’s call. 
 
Id. at 878, 154 P.3d at 449. Thus, any determination of a delivery call requires application of 
established evidentiary standards, legal presumptions and burdens of proof.  
Based on the foregoing, we conclude as follows: 
1. The Director may develop and implement a pre-season management plan for 
allocation of water resources that employs a baseline methodology, which 
methodology must comport in all respects with the requirements of Idaho’s prior 
18 
 
appropriation doctrine, be made available in advance of the applicable irrigation 
season, and be promptly updated to take into account changing conditions. 
2. A senior right holder may initiate a delivery call based on allegations that specified 
provisions of the management plan will cause it material injury. The baseline serves 
as the focal point of such delivery call. The party making the call shall specify the 
respects in which the management plan results in injury to the party. While factual 
evidence supporting the plan may be considered along with other evidence in making 
a determination with regard to the call, the plan by itself shall have no determinative 
role.  
3. Junior right holders affected by the delivery call may respond thereto, and shall bear 
the burden of proving by clear and convincing evidence that the call would be futile 
or is otherwise unfounded. A determination of the call shall be made by the Director 
in a timely and expeditious manner, based on the evidence in the record and the 
applicable presumptions and burdens of proof.  
B. The Conjunctive Management Rules require that out-of-priority diversions only be 
permitted pursuant to a properly enacted mitigation plan. 
 
The Coalition and the City dispute whether the Director timely administered the delivery 
call. The district court held that the Director abused his discretion because he failed to require 
mitigation of material injury to reasonable carry-over storage in the season in which the injury 
occurs. In effect, the City completely disregards the holding of the district court, relying instead 
upon this Court’s statement in AFRD #2 that a strict schedule cannot be imposed upon the 
delivery call process due to the complexity of the factual determinations inherent to the process. 
143 Idaho at 875, 154 P.3d at 446.  
However, the issue considered by the district court in this case was narrower than that 
before this Court in AFRD #2. Here, the district court assessed whether the Director’s “wait and 
see” approach to mitigating material injury to carry-over storage rights complied with the 
Conjunctive Management Rules. Based on the plain language of Rule 43, the district court 
concluded that the Director’s approach was contrary to the Rule’s requirement that the mitigation 
plan contain contingency provisions to protect senior rights in the event that mitigation water 
becomes unavailable.  
Rule 42 provides that determination of material injury must account for the fact that: 
19 
 
[T]he holder of a surface water storage right shall be entitled to maintain a 
reasonable amount of carry-over storage to assure water supplies for future dry 
years. In determining a reasonable amount of carry-over storage water, the 
Director shall consider the average annual rate of fill of storage reservoirs and the 
average annual carry-over for prior comparable water conditions and the projected 
water supply for the system.  
 
IDAPA 37.03.11.042.01.g. (emphasis added). Rule 40 provides that once the Director makes a 
determination of material injury, the Director shall:  
a. Regulate the diversion and use of water in accordance with the priorities of 
rights of the various surface or ground water users whose rights are included 
within the district, provided, that regulation of junior-priority ground water 
diversion and use where the material injury is delayed or long range may, by 
order of the Director, be phased-in over not more than a five-year (5) period to 
lessen the economic impact of immediate and complete curtailment; or  
b. Allow out-of-priority diversion of water by junior-priority ground water users 
pursuant to a mitigation plan that has been approved by the Director.  
 
IDAPA 37.03.11.040.01.a,b (emphasis added). In other words, when the Director responds to a 
delivery call regarding diversions occurring within an area having a common ground water 
supply in an organized water district, the Director shall either regulate and curtail the diversions 
causing injury or approve a mitigation plan that permits out-of-priority diversion. Id.  
Nothing in the Director’s order suggests that he intended a phased-in mode of 
curtailment, and therefore the option to permit out-of-priority diversion pursuant to a mitigation 
plan is the applicable provision in the instant case. Where a mitigation plan is the response to 
material injury, the Rules provide that the Director must consider several factors to determine 
whether the proposed plan “will prevent injury to senior rights,” including: 
Whether the mitigation plan provides replacement water supplies or other 
appropriate compensation to the senior-priority water right when needed during a 
time of shortage even if the effect of pumping is spread over many years and will 
continue for years after pumping is curtailed. A mitigation plan may allow for 
multiseason accounting of ground water withdrawals and provide for replacement 
water to take advantage of variability in seasonal water supply. The mitigation 
plan must include contingency provisions to assure protection of the senior-
priority right in the event the mitigation water source becomes unavailable.  
 
IDAPA 37.03.11.043.03.c (emphasis added). As the district court held, this language is 
unambiguous. Thus, while the Rules permit a mitigation plan to “wait and see” how much water 
is necessary to protect against material injury, they require that such plan identify prospective 
20 
 
means by which water will be provided in order to prevent material injury. As the district court 
stated, the system established by the Director causes  
 . . . the prior appropriation doctrine [to be] turned upside down. Therefore, unless 
assurances are in place that carry-over shortfalls will be replaced if the reservoirs 
do not fill, the risk of shortage ultimately falls on the senior. As such, the very 
purpose of the carry-over component of the storage right – insurance against risk 
of future shortage – is effectively defeated. 
 
We affirm the district court’s holding that the Director abused his discretion by failing to 
approve a mitigation plan that provided contingency plans by which junior water right holders 
would ensure that material injury would not occur to the seniors’ carry-over storage rights. 
C. The Coalition failed to preserve its right to appeal the district court’s failure to order 
the Director to issue a single final order. 
 
 
The Director adopted the hearing officer’s conclusion that refinements to the 
methodology for determining material injury were necessary, but did not include those 
refinements in his final order of September 5, 2008, which is the order from which the parties 
sought judicial review. Instead, the Director stated that he would “issue a separate, final order 
before the end of 2008 detailing his approach for predicting material injury to reasonable in-
season demand and reasonable carryover for the 2009 irrigation season.” In its July 24, 2009, 
order on petition for judicial review, the district court held that by issuing separate final orders, 
the Director acted contrary to I.C. §§ 67-5244, 67-5246, and 67-5248, as well as IDWR 
Administrative Rules 720 and 740, and thus abused his discretion.9 The district court observed 
that “the issuance of separate ‘Final Orders’ undermines the efficacy of the entire delivery call 
process, including the process of judicial review. Such a process requires certainty and 
definiteness as to the Final Order issued, so that any review of the Final Order can be complete 
                                                 
9 The relevant portions of these statutes and rules are as follows:  
 
I.C. § 67-5244(2)(a) provides that the agency head shall “issue a final order in writing within fifty-six (56) 
days of the receipt of the final briefs or oral argument, whichever is later, unless the period is waived or extended 
with the written consent of all parties or for good cause shown.” 
 
I.C. § 67-5246(2) provides that “[i]f the presiding officer issued a recommended order, the agency head 
shall issue a final order following review of that recommended order.” 
 
 I.C. § 67-5248 provides that “[a]n order must be in writing and shall include: (a) A reasoned statement in 
support of the decision. Findings of fact, if set forth in statutory language, shall be accompanied by a concise and 
explicit statement of the underlying facts of record supporting the findings.” 
 
IDAPA 37.01.01.720.02.c provides that “[t]he agency head or designee will issue a final order within fifty-
six (56) days of receipt of the written briefs or oral argument, whichever is later, unless waived by the parties or for 
good cause shown.” 
 
Finally, IDAPA 37.01.01.740.02.c provides that “[p]ursuant to Sections 67-5270 and 67-5272, Idaho Code, 
any party aggrieved by this final order or orders previously issued in this case may appeal this final order and all 
previously issued orders in this case to district court . . . .” 
21 
 
and timely.” Nonetheless, finding no appropriate remedy to be available, the court did not order 
any specific form of relief. 
 
On August 14, 2009, the City filed a petition for rehearing requesting clarification as to 
the opportunity for a hearing with regard to the Director’s approval of a mitigation plan. On that 
same date, the Groundwater Appropriators also filed a petition for rehearing requesting, in 
relevant part, that the district court order the Director to issue a single final order as to all issues. 
On November 6, 2009, the Coalition submitted a response to the petitions for rehearing and 
argued that the best approach “consistent with the requirements of judicial review under Idaho’s 
APA, [was] to presume the Director will issue a new final order consistent with this Court’s 
order,” and address any insufficiencies once the Director’s order was available for review.  
On March 4, 2010, the court entered an order staying the decision on petitions for 
rehearing, pending issuance by the Director of a revised final order. The court issued this order 
based upon Department’s representations that it could issue an order containing the modified 
material injury methodology based upon existing evidence in the record. The district court 
ordered that it would “hold in abeyance any final decision on rehearing until such an order is 
issued and the time periods for filing a motion for reconsideration and petition for judicial review 
of the new order have expired.”  
 
The Director entered his final order regarding the methodology on April 7, 2010. The 
record does not demonstrate that the Coalition raised any complaints regarding the content of the 
final order within the time for appeal. See I.C. § 67-5273(2) (final order must be appealed within 
twenty-eight days of its service). The district court resumed its proceedings on rehearing and 
entered an order on August 23, 2010.  
 
On appeal, the party asserting error with regard to the separate final orders is the 
Coalition. However, the Coalition has failed to preserve the issue by failing to object before the 
district court.  
D. This Court’s decision in A & B Irr. Dist. v. Idaho Dep’t of Water Resources, 153 Idaho 
500, 284 P.3d 225 (2012), decided the evidentiary standard applicable to determinations of 
material injury. 
 
In its Memorandum and Order on Petition for Judicial Review, the district court held that 
“clear and convincing” was the proper evidentiary standard to determine material injury in a 
delivery call. The City and the Groundwater Appropriators both contend that the application of 
22 
 
the higher evidentiary standard is not supported by Idaho law. We recently rejected this claim in 
A & B Irr. Dist. v. Idaho Dep’t of Water Resources, 153 Idaho 500, 284 P.3d 225 (2012), stating: 
It is Idaho’s longstanding rule that proof of “no injury” by a junior 
appropriator in a water delivery call must be by clear and convincing evidence. 
Once a decree is presented to an administrating agency or court, all changes to 
that decree, permanent or temporary, must be supported by clear and convincing 
evidence. 
Id. at 524, 284 P.3d at 249. We see no reason to deviate from this decision. Accordingly, the 
decision of the district court is affirmed on this issue. 
V. CONCLUSION 
We affirm the district court’s order approving the Director’s use of a predicted baseline 
of senior water right holders’ needs as a starting point in considering the material injury issue in 
a water call so long as the Director observes established presumptions and burdens of proof in 
his determination of the issue. We affirm the district court’s holding that the Director abused his 
discretion by failing to comply with the procedural framework applicable to mitigation plans 
when he approved replacement water plans. The Coalition has failed to preserve the issue of the 
bifurcated final orders. We affirm the district court’s determination that the clear and convincing 
evidence standard is to be applied in determining material injury. No costs are awarded. 
 
Chief Justice BURDICK and Justices EISMANN, J. JONES and Justice Pro Tem 
TROUT CONCUR.