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IN THE SUPREME COURT OF THE STATE OF IDAHO

Docket No. 43564

IN THE MATTER OF APPLICATION FOR 

PERMIT NO. 36-16979 IN THE NAME OF 

NORTH SNAKE GROUND WATER 

DISTRICT, ET AL.

_____________________________________

NORTH SNAKE GROUND WATER 

DISTRICT, MAGIC VALLEY GROUND 

WATER DISTRICT and SOUTHWEST 

IRRIGATION DISTRICT,

Petitioners-Respondents on Appeal,

v.

IDAHO DEPARTMENT OF WATER 

RESOURCES and GARY SPACKMAN, in 

his official capacity as Director of the Idaho 

Department of Water Resources,

Respondents-Respondents on Appeal,

v.

RANGEN INC.,

 Intervenor-Appellant on Appeal.

_______________________________________

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Boise, April 2016 Term

2016 Opinion No. 61

Filed: May 27, 2016

Stephen W. Kenyon, Clerk

Appeal from the District Court of the Fifth Judicial District of the State of Idaho, Twin 

Falls County. Hon. Eric J. Wildman, District Judge.

The decision of the district court is affirmed.

Brody Law Office, PLLC, Rupert; Haemmerle Law Office, PLLC, Hailey; May, 

Browning & May, PLLC, Boise, for appellant Rangen, Inc. Fritz X. Haemmerle argued.

Racine Olson Nye Budge & Bailey, Chartered, Pocatello, for respondents Water 

Districts. Randall C. Budge argued.

Hon. Lawrence G. Wasden, Attorney General, for respondents Idaho Department of 

Water Resources and Gary Spackman.

_____________________
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J. JONES, Chief Justice

This case springs from an application for permit to obtain a water right filed by the 

respondents, North Snake Ground Water District, Magic Valley Ground Water District and 

Southwest Irrigation District (“the Districts”), to appropriate water from Billingsley Creek on 

real property owned by appellant Rangen, Inc. After the Director of the Idaho Department of 

Water Resources (“the Department”) denied the application in a final order, the Districts 

petitioned for judicial review. The district court set aside the Director’s final order. Rangen 

appealed.

I.

FACTUAL AND PROCEDURAL BACKGROUND

This matter concerns an application to appropriate water filed by the Districts on April 3, 

2013. The Districts applied to appropriate 12 cfs of water from unnamed springs and Billingsley 

Creek for two purposes: mitigation for irrigation and fish propagation. The Districts filed the 

application in response to a delivery call initiated by Rangen in December 2011. In the delivery 

call, Rangen sought to curtail various water rights of the Districts’ members, alleging that junior 

priority ground water pumping was causing material injury to two of its senior water rights.

The Director issued a curtailment order in Rangen’s delivery call proceeding in January 

2014, after concluding that Rangen was being materially injured by the junior priority ground 

water pumping. The order noted that junior rightholders subject to curtailment could continue 

pumping if an adequate mitigation plan were proposed and approved. The Districts intended to 

use the new water right to satisfy mitigation obligations and thereby avoid curtailment.

The Districts’ application proposes to divert 12 cfs from Billingsley Creek. The 

application designates a place of use and point of diversion located entirely on Rangen’s real 

property. As amended, the application indicates that 4 cfs would be diverted via the construction 

and implementation of a pump station and 8 cfs would be diverted through Rangen’s existing 

Bridge Diversion. However, Lynn Carlquist, a director of the North Snake Ground Water District 

who testified on the Districts’ behalf, indicated that the purpose of the pump would be to deliver 

water to the point of use specified in a mitigation order. Wayne Courtney, Rangen’s executive 

vice president, testified that Rangen does not desire and would not benefit from the installation 

or operation of the pump system. Nonetheless, the purpose of the pump would be to convey 

mitigation water to parts of the Rangen facility.
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Rangen has historically diverted water from Billingsley Creek. However, this Court 

recently ruled that Rangen’s water rights permit it to divert water from the mouth of the MartinCurren Tunnel but not from the springs on the talus slope from which the mouth of the tunnel 

protrudes. Rangen, Inc. v. Idaho Dep’t of Water Res., 159 Idaho 798, 806, 367 P.3d 193, 201 

(2016). We also ruled that Rangen’s water rights do not permit it to divert water at the so-called 

Bridge Diversion. Id. at 807, 367 P.3d at 202. As a result, Rangen has lacked the legal authority 

to appropriate water from the headwaters of Billingsley Creek since Rangen’s water rights were 

adjudicated in 1997.

Before the Department ruled on the Districts’ April 2013 application, Rangen filed a 

competing application on February 3, 2014. Rangen’s application sought to divert 59 cfs from 

Billingsley Creek for fish propagation, with the same source and point of diversion elements as 

the Districts had requested. On January 2, 2015, Rangen’s application was approved for 28.1 cfs

for fish propagation with a priority date of February 3, 2014. This permit has apparently not been 

challenged.

Department employee James Cefalo presided over a hearing on the Districts’ application 

on September 17, 2014. He subsequently issued a Preliminary Order Issuing Permit in which he 

found that the application was made in good faith, did not conflict with the local public interest, 

and otherwise satisfied the necessary requirements. Therefore, he approved a conditional permit 

authorizing the Districts to appropriate 12 cfs from Billingsley Creek for mitigation purposes 

with a priority date of April 3, 2013.

Rangen filed a protest of the hearing officer’s preliminary order with the Director. After 

the parties briefed the issues, the Director subsequently issued a final order overturning the 

hearing officer’s decision and denying the application. The Director concluded that the Districts’ 

application was made in bad faith and that the application was not in the local public interest.

The Districts petitioned for judicial review, asserting that the Director abused his 

discretion and exceeded his authority in denying their application. On judicial review, the district 

court set aside the Director’s final order, concluding that the application was neither made in bad 

faith nor counter to the local public interest. The district court also rejected Rangen’s arguments 

that the Districts’ application was incomplete or speculative and that mitigation is not a 

recognized beneficial use of water under Idaho law.
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Rangen timely appealed the district court’s order setting aside the Director’s final order. 

Rangen raises substantially the same arguments on appeal as it did before the district court.

II.

ISSUES PRESENTED ON APPEAL

1. Whether the district court erred in setting aside the Director’s determination that the 

Districts’ application was made in bad faith.

2. Whether the district court erred in setting aside the Director’s determination that the 

Districts’ application was not in the local public interest.

3. Whether the district court erred in upholding the Director’s determination that the Districts’ 

application was complete.

4. Whether the district court erred in upholding the Director’s determination that mitigation is a 

viable beneficial use.

5. Whether the district court erred in determining that the Districts’ application was not made 

for speculative purposes.

6. Whether the district court erred in determining that the Director’s final order prejudiced the 

Districts’ substantial rights.

III.

STANDARD OF REVIEW

In an appeal from a district court where the court was acting in its appellate capacity

under the Idaho Administrative Procedure Act (“IDAPA”), “we review the decision of the

district court to determine whether it correctly decided the issues presented to it.” Clear Springs 

Foods v. Spackman, 150 Idaho 790, 797, 252 P.3d 71, 78 (2011). However, we review the

agency record independently of the district court’s decision. Spencer v. Kootenai Cnty., 145

Idaho 448, 452, 180 P.3d 487, 491 (2008). A reviewing court “defers to the agency’s findings of

fact unless they are clearly erroneous,” and “the agency’s factual determinations are binding on

the reviewing court, even when there is conflicting evidence before the agency, so long as the

determinations are supported by substantial competent evidence in the record.” A & B Irrigation 

Dist. v. Idaho Dep’t of Water Res., 153 Idaho 500, 505–06, 284 P.3d 225, 230–31 (2012).

Substantial evidence is “relevant evidence that a reasonable mind might accept to support a

conclusion.” In re Idaho Dep’t of Water Res. Amended Final Order Creating Water Dist. No. 

170, 148 Idaho 200, 212, 220 P.3d 318, 330 (2009) (quoting Pearl v. Bd. of Prof’l Discipline of 

Idaho State Bd. of Med., 137 Idaho 107, 112, 44 P.3d 1162, 1167 (2002)). 
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Idaho Code section 67-5279(3) provides that the district court must affirm the agency 

action 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.

I.C. § 67-5279(3); Clear Springs Foods, 150 Idaho at 796, 252 P.3d at 77. Even if one of these

conditions is met, an “agency action shall be affirmed unless substantial rights of the appellant

have been prejudiced.” I.C. § 67-5279(4). “If the agency action is not affirmed, it shall be set

aside, in whole or in part, and remanded for further proceedings as necessary.” I.C. § 67-5279(3).

IV.

ANALYSIS

A. The district court did not err in setting aside the Director’s determination that the 

Districts’ application was made in bad faith.

Idaho law allows the Director to deny an application to appropriate water in a variety of 

circumstances, including “where it appears to the satisfaction of the director that such application 

is not made in good faith.” I.C. § 42-203A(5)(c). “Good faith” is not defined by statute, but the 

Department’s administrative rules provide criteria for evaluating good faith.

The criteria requiring that the Director evaluate whether an application is made in 

good faith or whether it is made for delay or speculative purposes requires an 

analysis of the intentions of the applicant with respect to the filing and diligent 

pursuit of application requirements. The judgment of another person’s intent can 

only be based upon the substantive actions that encompass the proposed 

project. . . . An application will be found to have been made in good faith if:

i. The applicant shall have legal access to the property necessary to 

construct and operate the proposed project, [or] has the authority to 

exercise eminent domain authority to obtain such access . . . ; and

ii. The applicant is in the process of obtaining other permits needed to 

construct and operate the project; and

iii. There are no obvious impediments that prevent the successful 

completion of the project.

IDAPA 37.03.08.045.01.c.

The Director concluded that the Districts’ application was made in bad faith. The 

Director determined there to be a threshold impediment to “completion of the project” for a 

majority of the quantity of water sought to be appropriated. To perfect a project for a water right, 
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the Director asserted, there inherently must be completion of works for beneficial use. The 

Director stated that “[t]here is no ‘project’ and consequently cannot be a ‘completion of the 

project’ for the 8.0 cfs, because the 8.0 cfs will be diverted through the existing Bridge Diversion 

without any construction of a project or any completion of works for beneficial use.” The 

Director concluded that the Districts’ intent was to assign any water right granted under the 

application to Rangen, rather than to construct any works or complete any project, and that the 

absence of a “project” necessitated the conclusion that the application was filed in bad faith.

The district court set aside the Director’s conclusion on this point, finding that it was not 

supported by the record. Reviewing the record, the district court found that the Districts’ 

application proposes to divert water from two separate points of diversion via two separate 

project works. Four cfs would be diverted via a newly constructed pump station and 8 cfs would 

be diverted via the existing Bridge Diversion. The district court observed that there is no dispute 

that the first diversion contemplates the construction of project works. The Director apparently

ignored this construction project, concluding that “for a majority of the quantity of water sought 

to be appropriated” the absence of a construction project required a finding of bad faith. 

(emphasis added). Nothing in the plain language of IDAPA 37.03.08.045.01.c appears to 

authorize the Director to ignore projects involving less than a majority of the water sought to be 

appropriated in order to support a finding of bad faith.

The district court found that the Director interpreted IDAPA 37.03.08.045.01.c to require 

new construction or a new project and that this requirement is counter to Idaho water law and 

leads to absurd results. It found that such an interpretation conflicts with the constitutional 

guarantee that “[t]he right to divert and appropriate the unappropriated waters of any natural 

stream to beneficial uses, shall never be denied.” Idaho Const. art. XV, § 3. It also found that it 

would be absurd to deny a water right permit application where the applicant intends to divert 

water and apply it to a beneficial use through utilization of pre-existing project works. To 

illustrate, the district court gave the example of a homeowner who realizes that an existing well 

requires a water right. Under the Director’s interpretation, the homeowner’s application would 

have been filed in bad faith because it proposed no construction of new project works. This is an 

absurd result. After setting aside the Director’s conclusion that the lack of new project works 

meant the application was filed in bad faith, the district court independently examined the criteria 

in IDAPA 37.03.08.045.01.c and concluded that there was no evidence of bad faith. 
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On appeal, Rangen acknowledges that a proposed project may use existing physical 

structures but contends that there still must be some identifiable project by which the applicant 

intends to beneficially use the water. Rangen argues that the Districts’ application does not 

propose a project but, instead, that the Districts merely propose to watch Rangen continue to 

divert and beneficially use the water in the same way it has for more than fifty years. In making 

this argument, Rangen ignores that it has had no legal right to divert water from Billingsley 

Creek since at least 1997. Therefore, from a legal standpoint, the water was unappropriated 

during that period. See I.C. § 42-201.

The district court correctly held that IDAPA 37.03.08.045.01.c does not require new 

construction or a new project. The rule does not contain the word “new.” Contrary to the 

Director’s conclusion, there is a project as contemplated by the rule, both for the 8 cfs part and 

the 4 cfs part. The existing Bridge Diversion is a part of a project that has already been

completed and is intended to be utilized by the Districts as a “project work” to allow it to 

complete the 8 cfs part of its project. With regard to the 4 cfs part, the Districts propose to 

construct and operate a pump station. That project certainly satisfies the requirements set forth in 

IDAPA 37.03.08.045.01.c. Either of these projects, standing alone, would preclude a conclusion 

of bad faith on the grounds used by the Director. There was simply no reasonable way on this 

record for the Director to conclude that the application was filed in bad faith. I.C. § 67-

5279(3)(d). For this reason, we affirm the district court’s order setting aside the Director’s 

contrary conclusion.

B. The district court did not err in setting aside the Director’s determination that the 

Districts’ application was not in the local public interest.

Idaho law allows the Director to deny an application to appropriate water where the 

proposed use “will conflict with the local public interest as defined in section 42-202B, Idaho 

Code.” I.C. § 42-203A(5)(e). Section 42-202B defines “local public interest” as “the interests 

that the people in the area directly affected by a proposed water use have in the effects of such 

use on the public water resource.” The Director concluded that the Districts’ application was not 

in the local public interest for two reasons. First, the Director found that approval of the 

Districts’ application would establish an unacceptable precedent in other delivery call 

proceedings that are or may be pending. The Director regarded the application as “the epitome of 

a mitigation shell game,” finding it objectionable for the Districts to try to mitigate by delivering 

water to Rangen that Rangen has been using for fifty years. The Director noted that the Districts’ 
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application brings no new water to the already diminished flows of the Curren Tunnel or 

headwaters of Billingsley Creek. Second, the Director concluded that it is inconsistent with the 

local public interest and inappropriate for the Districts to exercise their power of eminent domain 

to facilitate obtaining a water right for mitigation wholly located on land owned by Rangen. 

The district court rejected both of these reasons, setting aside the Director’s conclusion 

that the application was not in the local public interest. The district court noted that the 

Director’s ability to evaluate the local public interest related to a proposed water use is statutorily 

limited and that neither of the Director’s rationales were authorized by the statute. The statute 

authorizes only evaluation of “the effects of [the proposed] use on the public water resource” and 

neither of the Director’s reasons for his conclusion relate to such effects. I.C. § 42-202B(3). The 

district court expressly noted that section 42-202B(3) was amended in 2003 for the specific 

purpose of narrowing the scope of an evaluation of local public interest. Chisholm v. Idaho Dep’t 

of Water Res., 142 Idaho 159, 164 n.3, 125 P.3d 515, 520 n.3 (2005). The court further noted that 

the Director appeared to penalize the Districts for being first in time, in direct contravention of 

the mandate in the Idaho Constitution that first in time is first in right. See Idaho Const. art. XV, 

§ 3. Nor, the district court concluded, is it relevant that the Districts did not propose to bring new 

water to the Curren Tunnel or Billingsley Creek. An application to appropriate water, by its very 

definition, does not bring new water to a water system, but rather seeks to appropriate 

unappropriated water.

The district court also rejected the Director’s rationale that it would be inconsistent with 

the local public interest for the Districts to exercise their power of eminent domain to obtain a 

water right for mitigation. The Idaho Legislature has expressly granted ground water districts 

“the power of eminent domain in the manner provided by law for the condemnation of private 

property for easements, rights-of-way, and other rights of access to property necessary to the 

exercise of the mitigation powers herein granted.” I.C. § 42-5224(13). The district court found 

that the Director lacks the authority to determine when the use of that power is appropriate and,

further, that the Director failed to articulate how it related to any effects on the public water 

resource.

On appeal, Rangen argues that the Director’s interpretation of “local public interest” 

should be given great weight. Rangen quotes a 1988 case for the proposition that “[t]he 

determination of what elements of the public interest are impacted, and what the public interest 
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requires, is committed to Water Resources’ sound discretion.” Matter of Permit No. 47-7680, 

114 Idaho 600, 607, 759 P.2d 891, 898 (1988). Rangen then quotes an almost identical statement 

from the Statement of Purpose for the 2003 legislative amendment narrowing the definition of 

“local public interest”: “The determination of what elements of the public interest are impacted, 

and what the public interest requires, is committe[d] to Water Resources’ sound discretion.”1

Statement of Purpose, H.B. 284, 2003 Leg., RS Doc. No. 13046, available at

http://legislature.idaho.gov/legislation/2003/H0284.html#sop. Rangen appears to argue that this 

non-binding Statement of Purpose supersedes the language of the statute.

The Director’s interpretation of “local public interest” in this case is entitled to no 

deference because it is inconsistent with the plain language of the statutory definition provided in 

Idaho Code section 42-202B. The Director appears to have entirely ignored section 42-202B in 

favor of an alternate definition of “local public interest,” allowing him to evaluate whether a 

proposed use brings new water or is a proper use of eminent domain authority. Any 

interpretation of “local public interest” that is inconsistent with the statutory definition of that 

term cannot be reasonable. Further, because the definition of the term “local public interest” is 

expressly provided by statute, the Director lacks the authority to supply his own interpretation. 

See J.R. Simplot Co., Inc. v. Idaho State Tax Comm’n, 120 Idaho 849, 860, 820 P.2d 1206, 1217 

(1991) (“when an agency construction clearly ignores the statute which it professes to interpret, 

then the Court need not pay heed to the statutory construction.”).

Nor is the Director’s conclusion regarding local public interest supported by the record. 

The Director cited no evidence relevant to the statutory definition of local public interest in the 

pertinent section of the final order. Because the Director exceeded his authority by evaluating 

local public interest based on factors not contemplated in the statutory definition, the district 

court did not err in setting aside the Director’s conclusion. We affirm the district court’s order 

setting aside the Director’s conclusion that the Districts’ application was not in the local public 

interest.

 

1 Rangen apparently overlooks the very next sentence from the Statement of Purpose: “In recent years, some 

transactions have been delayed by protests based on a broad range of social, economic and environmental policy 

issues having nothing to do with the impact of the proposed action on the public’s water resource.” Given that the 

Districts’ proposed use appears to have no effect whatsoever on the properly-evaluated local public interest, it is fair 

to consider whether Rangen’s resistance to the application is just the sort of protest the Legislature sought to 

forestall. Statement of Purpose, H.B. 284, 2003 Leg., RS Doc. No. 13046, available at

http://legislature.idaho.gov/legislation/2003/H0284.html#sop
10

C. The district court did not err in upholding the Director’s determination that the 

Districts’ application was complete.

Rangen also argues that the Districts’ application should have been denied because it was 

incomplete. Rangen asserts that there was no evidence the application was properly executed. 

IDAPA 37.03.08.035.03.b.xii requires that an application for permit “shall be signed by the 

applicant listed on the application or evidence must be submitted to show that the signator has 

authority to sign the application.” The Department hearing officer, the Director, and the district 

court each found that the application was properly executed and otherwise complete.

The district court found that

[t]he Districts’ application and subsequent amended applications were 

signed by Thomas J. Budge, the Districts’ attorney of record. Lynn Carlquist, as 

representative of the Districts, testified that Budge has represented the Districts 

since 2007, that the Districts were consulted prior to the filing of the application, 

and that Budge had authority to file the application on behalf of the Districts. . . . 

Therefore, the Court finds that the Director did not abuse his discretion in making 

the determination that the Districts’ application was properly executed, and 

further finds that his decision in this respect is supported by substantial evidence 

in the record.

Rangen alleges a variety of perceived deficiencies in the Districts’ application: the 

application does not indicate which, if any, of the individual ground water districts Mr. Budge 

was signing for; none of the individual districts’ addresses are included; there is no evidence of 

any authority of Mr. Budge to sign for any of the districts; some districts failed to introduce 

evidence of corporate resolutions authorizing Mr. Budge to sign for them; some districts failed to 

introduce evidence of powers of attorney authorizing Mr. Budge to represent them; and some 

districts violated public meetings and open meetings laws by making the decision to authorize 

Mr. Budge to file the application during private telephone calls rather than properly noticed 

public meetings.

None of Rangen’s arguments undermine either of two basic facts. First, the rule in 

question requires merely “evidence . . . to show that the signator has authority to sign the 

application.” IDAPA 37.03.08.035.03.b.xii. Second, the Director found such evidence in the

form of Lynn Carlquist’s testimony that Mr. Budge was authorized to file the application. “The 

Court does not substitute its judgment as to the weight of evidence presented, Idaho Code § 67-

5279(1), but instead defers to the agency’s findings of facts unless they are clearly erroneous.”

Chisholm, 142 Idaho at 162, 125 P.3d at 518. “When conflicting evidence is presented the 
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agency’s findings must be sustained on appeal, as long as they are supported by substantial and 

competent evidence.” Id. On the record before us, it does not appear that the Director’s findings 

were clearly erroneous. The district court, therefore, was correct in affirming the Director’s 

conclusion that the Districts’ application was complete.

D. The district court did not err in upholding the Director’s determination that mitigation 

is a viable beneficial use.

Rangen argues on appeal that “mitigation” is not a valid, recognized beneficial use of 

water under Idaho law. It claims that mitigation describes a “motivation” rather than a beneficial 

use, because it describes why a water right is being sought rather than how the water is being 

used. Rangen asserts that without both delivery and use of water, a beneficial use never occurs.

Rangen further argues that the failure to identify an actual use makes it impossible to evaluate an 

application for a permit under the Idaho Code section 42-203A(5) factors.

The Director noted that the Department has previously recognized mitigation as a 

beneficial use, even though there is no definition for the beneficial use of “mitigation” in the 

Idaho Code or IDAPA. The Director pointed out that both Idaho Code section 42-5201 and the 

Department’s Conjunctive Management Rules similarly define the term “mitigation plan.” The 

Director adopted the hearing officer’s conclusion that “in order for the proposed mitigation use 

to be viable, it must prevent material injury to senior water rights or compensate senior water 

right holders for material injury.” Applying this conclusion, the Director further concluded that 

because the Districts’ application proposes to compensate Rangen for diminishment of the source 

listed on Rangen’s water rights (the Curren Tunnel) by delivering water from a separate source 

(Billingsley Creek), the beneficial use described in the Districts’ application falls within the 

definition of mitigation. Finally, the Director rejected the notion that a stated beneficial use of 

“mitigation” is not reviewable under the factors provided in Idaho Code section 42-203A(g). The 

Director also cited an example of an existing water right listing mitigation as a beneficial use. 

Water right no. 51-13067 designates the beneficial use as “mitigation from storage” without 

another identified use. 

The district court affirmed the Director’s conclusion that mitigation is a valid beneficial 

use, citing several examples where the Snake River Basin Adjudication Court has recognized the 

beneficial use of “mitigation.” E.g., Partial Decrees, SRBA Subcase Nos. 37-22631, 37-22632, 
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37-22633 (June 29, 2012); Partial Decree, SRBA Subcase No. 63-33511 (Mar. 3, 2014).2This 

only makes sense. The Districts were ordered to provide mitigation water to Rangen because it 

was not receiving the full amount of water to which it was entitled under its water rights as a 

result of the Districts’ groundwater pumping in the ESPA. The Districts’ purpose in filing their 

application here was to obtain the water necessary to replace the water of which Rangen was 

deprived. Rangen contends that the water of which it was deprived is necessary for fish 

propagation. Although the Districts will be providing the water, Rangen will be the end user of 

the water and it can hardly be said that Rangen will not put it to beneficial use.

The district court did not err in affirming the Director’s conclusion that mitigation is a 

valid beneficial use. Mitigation has been recognized as a beneficial use in both agency and 

judicial proceedings. Nor is Rangen correct in asserting that mitigation does not or cannot 

constitute a delivery and use of water. Even though the Districts’ application seeks a right to 

appropriate water that Rangen has historically used, that water was legally unappropriated at the 

time of the application. The Districts’ proposal was to deliver Billingsley Creek water to Rangen

via the Bridge Diversion to be used as mitigation water. There is nothing improper about 

mitigation as a beneficial use, either in the abstract or in the particular circumstances of this case. 

Therefore, we affirm the district court’s determination that the Director’s final order was correct 

in this respect.

E. The district court did not err in determining that the Districts’ application was not 

made for speculative purposes, as the record discloses that the Districts will furnish the 

mitigation water directly to Rangen.

Idaho law allows the Director to deny an application to appropriate water where “it 

appears to the director that such application . . . is made for delay or speculative purposes.” I.C. § 

42-203A(5). Speculation is defined as “an intention to obtain a permit to appropriate water 

without the intention of applying the water to beneficial use with reasonable diligence.” IDAPA 

37.03.08.045.01.c.

Although Rangen argued at the agency level that the Districts’ application was 

speculative, the Director did not address the speculation arguments because he concluded the 

application was filed in bad faith. On judicial review, the district court concluded that the 

Districts’ application was not speculative. The court found that there is no evidence in the record 

 

2 Copies of partial decrees and other orders entered in the SRBA Court are available at 

http://srba.idaho.gov/DOCSHT.HTM.
13

establishing a lack of intent by the Districts to apply the water to beneficial use with reasonable 

diligence. The court also declined to rule on Rangen’s arguments regarding the ability of the 

Districts to exercise their eminent domain authority to perfect their application for permit, 

holding that those issues would be more appropriately addressed in the context of a challenge to 

a condemnation proceeding. 

Procedurally, Rangen argues that the district court erred in independently concluding that 

the Districts’ application was not made for speculative purposes. Rangen asserts that because the 

Director did not rule on the speculation issue, the district court should have remanded to the 

Director for further findings on the issue. “The absence of findings and conclusions may be 

disregarded by the appellate court only where the record is clear, and yields an obvious answer to 

the relevant question.” Pope v. Intermountain Gas Co., 103 Idaho 217, 225, 646 P.2d 988, 996

(1982). Here, there is no dispute that the intent behind the application is to supply mitigation 

water to Rangen. The parties did not present factual disputes regarding the speculation issue, 

which they both addressed before the Director and the district court. Indeed, Rangen brought up 

the speculation issue on its own before the district court, primarily arguing the issue on legal 

grounds. From a factual standpoint, the record clearly indicates that the Districts’ application was 

not made for speculative purposes, as the Districts intend to supply it directly to Rangen for fish 

propagation. Therefore, it was not error for the district court, sitting in its appellate capacity, to 

address the issue even though the Director did not do so in his final order.

Rangen also makes a substantive argument that the Districts’ application is speculative. 

Citing cases from Colorado and Nevada but not Idaho, Rangen asserts that the well-established 

general rule throughout western, prior-appropriation states regarding speculation is that an 

appropriator must be the actual appropriator or have some agency relationship with the actual 

appropriator. Quoting Idaho law, Rangen argues that the “[l]ack of a possessory interest in the 

property designated as the place of use is speculation.” Lemmon v. Hardy, 95 Idaho 778, 781, 

519 P.2d 1168, 1171 (1974). Rangen asserts that the Districts lack a possessory interest because 

the place of use is entirely on Rangen’s real property and it has not granted the Districts a right to 

use the property. Accordingly, Rangen reasons, the application is necessarily speculative. 

However, Lemmon itself acknowledges that mere lack of a possessory interest does not result in 

speculation when the applicant has the power to acquire a sufficient possessory interest by 

condemnation. Id. at 780–781, 519 P.2d at 1170–1171. Rangen fails to acknowledge this crucial 
14

limitation, although it does argue at length on the issue of whether the Districts have the 

authority to exercise eminent domain against it.

Rangen further argues that the Districts have no way of obtaining the type of possessory 

interest necessary to perfect their application for permit. However, ground water districts are 

authorized by statute “[t]o have and exercise the power of eminent domain in the manner 

provided by law for the condemnation of private property for easements, rights-of-way, and 

other rights of access to property necessary to the exercise of the mitigation powers herein 

granted.” I.C. § 42-5224(13). Rangen argues that the Districts nonetheless lack actual legal 

authority to condemn Rangen’s property to complete the application.

Rangen appears to misquote IDAPA in its opening brief. Rangen asserts that “[t]he 

applicant shall have the legal access to the property necessary to construct and operate the 

proposed project, [and] has the authority to exercise eminent domain authority to obtain such 

access.”3IDAPA 37.03.08.045.01.c.i (alterations by Rangen). That paragraph of the 

Appropriation Rules actually reads, in its entirety, as follows:

The applicant shall have legal access to the property necessary to construct 

and operate the proposed project, has the authority to exercise eminent domain 

authority to obtain such access, or in the instance of a project diverting water from 

or conveying water across land in state or federal ownership, has filed all 

applications for a right-of-way. Approval of applications involving Desert Land 

Entry or Carey Act filings will not be issued until the United States Department of 

Interior, Bureau of Land Management has issued a notice classifying the lands

suitable for entry; and

IDAPA 37.03.08.045.01.c.i. Rangen’s addition of a bracketed “and” in its quotation of the rule 

misstates the law and is nonsensical. Nothing about this rule indicates that it applies only to 

water districts or other public entities; all applications to appropriate water are subject to the 

good faith analysis in Rule 045.01.c. If an applicant were required to show both legal access and

eminent domain authority before the Director would be required to find good faith, the Rule 

would apply only to governmental entities. This is an absurd result. Nor is it a natural reading of 

the rule. There are three primary clauses separated by commas, with the word “or” appearing at 

the beginning of the last primary clause. The more natural, and correct, way of reading the Rule 

is that an applicant may prove good faith by showing legal access or eminent domain authority. 

In light of this, Rangen’s subsequent focus on actual legal access is misplaced and irrelevant.

 

3

In its Reply Brief, Rangen quotes the same rule with “[or]” instead of “[and].”
15

Finally, Rangen appears to argue that the eminent domain statute grants the Districts 

“possible” legal access, but not “actual” legal access, which according to Rangen, would require 

a court order authorizing the use of the statutory eminent domain power. Rangen again quotes 

and emphasizes the portion of the Appropriation Rule requiring that an applicant “shall have 

legal access to the property,” while downplaying the alternative requirement specifying that 

“authority to exercise eminent domain authority” is sufficient. IDAPA 37.03.08.045.01.c.i. 

Rangen suggests that the Districts failed to introduce evidence that each of the individual ground 

water districts, which together comprise the Districts, properly adopted resolutions to authorize 

the initiation of a condemnation proceeding against Rangen at duly noticed and properly held 

meetings.

Despite the fact that the Director did not address Rangen’s speculation arguments, the 

district court held that “[t]he fact that the Districts have the express statutory authority to 

exercise the power of eminent domain for the condemnation of private property for easements, 

rights-of-way, and other rights of access to property necessary to the exercise of their mitigation 

powers is sufficient for the purposes of a speculation analysis.” Because there is no dispute that 

the Districts intended to apply the water to the beneficial use of mitigation, and because the

Districts have statutory authority to condemn Rangen’s real property to obtain legal access for 

mitigation purposes, we affirm the district court’s determination that the Districts’ application is 

not speculative.

F. The district court did not err in determining that the Director’s final order prejudiced

the Districts’ substantial rights.

As stated in the standard of review section, an agency decision will not be set aside 

unless one of the exceptions in Idaho Code section 67-5279(3) applies and the petitioner shows 

that its substantial rights have been prejudiced. I.C. § 67-5279(4). Here, the Districts petitioned 

for judicial review after the Director denied their permit in a final order. Accordingly, the 

Districts were required to show that their substantial rights had been prejudiced by the final 

order. The district court concluded that the Director’s final order prejudiced the Districts’ 

substantial rights relating to the ability to pursue the appropriation of unappropriated water and 

in their application for permit.

Rangen did not address this issue in its opening brief. Instead, Rangen argued that its own 

substantial rights were prejudiced by the reversal of the Director’s decision. Rangen cites no law 
16

in the single paragraph comprising this subsection of its opening brief, and it does not refer to 

this issue in its reply brief. Rangen fails to explain the legal relevance of any prejudice it suffers 

from the reversal of the Director’s decision, other than to reiterate the basic theme of its brief that 

the Districts should not get the unappropriated water at issue because Rangen has historically 

used it. Rangen asserts that if the Districts’ application is approved, “Rangen will be in the exact 

same position as before it filed its Delivery Call, injured and impacted without any meaningful 

mitigation.”

This is untrue. Prior to Rangen’s delivery call, the headwaters of Billingsley Creek were 

unappropriated and Rangen had no legal right to divert and use that water. If the Districts’ 

application is approved, Rangen will presumably acquire the right to use the Billingsley Creek 

headwaters as a result of the Districts’ fulfillment of an approved mitigation plan. It is true that if 

the application is denied, then Rangen’s own water right, with a later priority date than the 

Districts’ application, will entitle Rangen to legally divert and use the water from Billingsley 

Creek and the Districts will be required to provide an alternative source of mitigation or face 

curtailment. However, a basic application of the prior appropriation doctrine yields the 

inescapable conclusion that if the Districts’ application is complete and valid, the Districts’ claim 

to the water is superior to Rangen’s claim. It is irrelevant whether Rangen’s substantial rights are 

prejudiced by the district court’s order setting aside the Director’s final order.4The analysis 

inquiring whether a substantial right is prejudiced applies to a petitioner seeking judicial review 

of an agency decision. Rangen did not seek judicial review of the Director’s final order here.

Rangen perhaps intended instead to argue that the district court erred in concluding that 

the Director’s final order prejudices the Districts’ substantial rights. But because Rangen did not 

raise this issue in its opening brief on appeal, it is not properly before the Court and will not be 

considered. Bach v. Bagley, 148 Idaho 784, 790, 229 P.3d 1146, 1152 (2010). The district court’s 

ruling on this issue must stand because it has not been appealed.

V.

CONCLUSION

We affirm the district court’s decision setting aside the Director’s final order denying the 

Districts’ application for permit. Costs to Respondents.

 

4 Nor is it necessarily true that Rangen’s substantial rights were in fact prejudiced by the district court’s decision. 

Because the issue is irrelevant, we do not examine it here.
17

Justices EISMANN, BURDICK, and HORTON, and Justice Pro Tem WALTERS 

CONCUR.