Opinion ID: 2646417
Heading Depth: 1
Heading Rank: 4

Heading: analysis

Text: 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: 10 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 11 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 12 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 wellestablished 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. 13 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 upcoming 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 14 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.” 15 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 16 senior water rights according to their priority” rather than partake in this reevaluation. . . . 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 17 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, 144 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: 18 [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 seniorpriority 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 19 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 inseason 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 fiftysix (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 . . . .” 20 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 21 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.