IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 37348
IN THE MATTER OF LICENSED WATER )
RIGHT NO. 03-7018 IN THE NAME OF )
IDAHO POWER COMPANY. )
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)
IDAHO POWER COMPANY, ) Boise, April 2011 Term
)
Petitioner-Respondent, ) 2011 Opinion No. 63
)
v. ) Filed: May 26, 2011
)
IDAHO DEPARTMENT OF WATER ) Stephen W. Kenyon, Clerk
RESOURCES, )
)
Respondent-Appellant. )
_______________________________________ )
Appeal from the District Court of the Third Judicial District of the State of Idaho,
Washington County. The Honorable Susan E. Wiebe, District Judge.
The decision of the district court is reversed.
Honorable Lawrence G. Wasden, Attorney General, Boise, for appellant. Garrick
L. Baxter argued.
Barker Rosholt & Simpson, LLP, and James C. Tucker, Boise, for respondent.
Shelley M. Davis argued.
_____________________
J. JONES, Justice.
The Idaho Department of Water Resources (Department) appeals an order of the district
court requiring the Department to strike a term condition from a hydropower water right license
issued to Idaho Power Company. We reverse.
I.
Factual and Procedural Background
On December 24, 1975, Idaho Power Company filed an application with the Department
for a permit to divert and use 5000 cfs of water for hydropower generation purposes at its
1
Brownlee Dam facility. 1 The Department approved the application on January 29, 1976, and issued
permit no. 03-7018. The permit required Idaho Power to submit proof that the project had been
completed and the water had been applied to beneficial use by February 1, 1980. The permit also
contained a subordination condition stating that, “[t]he rights for the use of the waters under this
permit shall be subordinate to and not prevent or interfere with any future upstream diversion and
use of the waters of the Snake River and its tributaries for the irrigation of lands or other
consumptive beneficial uses in the Snake River watershed.” The permit did not include a condition
limiting the water right to a term of years.
Idaho Power subsequently applied for, and was granted, an extension of time to provide
proof of beneficial use. 2 On August 7, 1980, Idaho Power submitted proof that the project was
complete and the water had been applied to beneficial use. The Department acknowledged it had
received Idaho Power’s submission of proof of beneficial use by responding with a letter indicating
that the Department was required to conduct a field examination prior to issuing a license.
During the time that Idaho Power was applying for, and attempting to obtain, this water
right at Brownlee Dam, both Idaho Power and the Department were involved in a controversy
surrounding water rights in the Snake River Basin. See Idaho Power Co. v. State, 104 Idaho 575,
580–83, 661 P.2d 741, 746–49 (1983). In part, this controversy was the result of two decades of
increased groundwater pumping by other water users upstream of the Swan Falls Dam, which
decreased the water flow at the dam. Clear Springs Foods, Inc. v. Spackman, No. 37308-2010,
2011 WL 907115, at *2 (Idaho Mar. 17, 2011). As a result, Idaho Power filed a lawsuit against the
State and various water users, seeking a determination of the validity of its water rights at the
Swam Falls Dam and seeking a ruling that its water rights were not subject to future upstream
depletion. Id. One of the other issues in the case brought by Idaho Power involved a subordination
clause in the federal license that Idaho Power had obtained for its Hells Canyon Project. Id. The
district court held that the subordination clause in the federal license applied to all of Idaho
Power’s water rights used for hydropower purposes at all of its facilities on the Snake River
watershed, including its facilities at Swan Falls. Id. On appeal, this Court reversed the district
court’s holding in that regard, and remanded the case for further proceedings. Id. Idaho Power
1
Idaho Power already had three hydropower water rights to operate four power generating units at Brownlee Dam
but needed an additional water right to operate a fifth generating unit.
2
Pursuant to the extension, Idaho Power was required to put the water to beneficial use by February 1, 1985.
2
responded by filing a second lawsuit against the State of Idaho and approximately 7500 people
who claimed water rights in the Snake River Basin. In re Snake River Basin Water System, 115
Idaho 1, 3, 764 P.2d 78, 80 (1988).
In 1984, an agreement was entered into between Idaho Power, the State of Idaho, the
governor, and the attorney general, in an effort to resolve the controversy associated with the
company’s water rights at the Swan Falls Dam (the Swan Falls Agreement). Id. As a part of the
Swan Falls Agreement, the parties agreed to support legislation for the commencement of an
adjudication of water rights in the Snake River Basin. Id. One key piece of legislation that was
drafted and passed pursuant to the Swan Falls Agreement was I.C. § 42-203B, which went into
effect on July 1, 1985. 1985 Idaho Sess. Laws ch. 17, § 2, pp. 25–26. Idaho Code § 42-203B gave
the Department the specific authority to subordinate hydropower water rights in a permit or license
to the water rights of subsequent upstream depletionary users, and also authorized the Department
to limit a permit or license involving hydropower rights to a term of years. According to I.C. § 42-
203B(6),
The director shall have the authority to subordinate the rights granted in a permit or
license for power purposes to subsequent upstream beneficial depletionary uses. A
subordinated water right for power use does not give rise to any claim against, or right
to interfere with, the holder of subsequent upstream rights established pursuant to state
law. The director shall also have the authority to limit a permit or license for power
purposes to a specific term.
Subsection (6) of this section shall not apply to licenses which have already been
issued as of the effective date [July 1, 1985] of this act.
I.C. § 42-203B(6) (emphasis added).
I.C. § 42-203B(7) goes on to state,
The director in the exercise of the authority to limit a permit or license for power
purposes to a specific term of years shall designate the number of years through which
the term of the license shall extend and for purposes of determining such date shall
consider among other factors:
(a) The term of any power purchase contract which is, or reasonably may
become, applicable to, such permit or license;
(b) The policy of the Idaho public utilities commission (IPUC) regarding
the term of power purchase contracts as administered by the IPUC
under and pursuant to the authority of the public utility regulatory
policy act of 1978 (PURPA);
(c) The term of any federal energy regulatory commission (FERC) license
granted, or which reasonably may be granted, with respect to any
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particular permit or license for power purpose;
(d) Existing downstream water uses established pursuant to state law.
The term of years shall be determined at the time of issuance of the permit, or as soon
thereafter as practicable if adequate information is not then available. The term of
years shall commence upon application of water to beneficial use. The term of years,
once established, shall not thereafter be modified except in accordance with due
process of law.
I.C. § 42-203B(7) (emphasis added).
After the enactment of I.C. § 42-203B, the Department conducted a beneficial use
examination with respect to the permit. On September 8, 1985, the Department submitted a
beneficial use field report confirming that the project had been completed and recommending
licensure. On November 16, 2007, the Department issued a preliminary order approving a license
for water right no. 03-7018. The license contained the following term condition:
The diversion and use of water for hydropower purposes under this license is subject
to review by the Director after the date of expiration of the Federal Energy Regulatory
Commission license for Brownlee Dam. 3 Upon appropriate findings relative to the
interest of the public, the Director may cancel all or any part of the use authorized
herein and may revise, delete or add conditions under which the right may be
exercised.
This term condition was not included in the original permit.
Idaho Power subsequently filed a protest and petition for hearing, objecting to the inclusion
of the term condition in the license. Idaho Power argued that because the condition was not
included in the water right permit, the term condition was unlawful. Thereafter, the Department
provided Idaho Power with a position statement, indicating that,
[e]ffective July 1, 1985, Idaho Code §§ 42-203B (6) and (7) authorize the Department
to limit a permit or license for power purposes to a specific term. Consistent with I.C.
§§ 42-203B (6) and (7), it is the Department’s standard practice to put term review
conditions on all permits and licenses for the use of water to generate power. 4
3
The record indicates that Idaho Power’s federal power license for the Hells Canyon Project, which includes
Brownlee Dam, expired in 2005. However, it appears the Department, before issuing the water license in 2007,
checked with the Federal Energy Regulatory Commission and learned that the federal license “will not change upon
renewal.”
4
The position statement included an Administrator’s Memorandum, dated June 19, 1986, indicating how regional
offices should handle approval of permits for hydropower purposes. The memorandum indicates that when dealing
with a hydropower application coming within FERC jurisdiction, departmental staff need to be aware of FERC
licensing conditions for the facility in question. An attachment to the memorandum shows standard conditions of
approval for a state water rights permit and the language of one of such conditions is that which was incorporated
into the license at issue in this case. The memorandum notes that an applicant “can request Department action on an
application for permit” prior to receiving FERC approval.
4
Idaho Power later withdrew its protest and petition for hearing, and the Department issued
an order designating license no. 03-7018 a final order. In its order, the Department articulated the
legal basis for including the term condition in the license. Specifically, the Department determined
that the plain language of I.C. § 42-203B gives the Department the authority to insert a term
condition in a permit or a license. The Department also concluded that Idaho Power did not have a
vested water right prior to obtaining the license because a permit is merely an inchoate right that
only ripens into a vested right upon obtaining a license and, therefore, including a term condition in
the license did not interfere with a vested right.
Idaho Power sought judicial review of the Department’s final order by the district court, 5
arguing that (1) the Department did not have the statutory authority under I.C. § 42-203B to
include a term condition in the license; (2) Idaho Power was stripped of its vested water rights by
the Department’s act of applying the statute retroactively; (3) the term condition, as written, is
unconstitutional because it grants the Department broad and virtually unlimited discretion in the
exercise of its duties without due process of law; and (4) the Department should be estopped from
adding the term condition to the license because Idaho Power made substantial investments and
changed its position in reliance on the terms of the original permit. The district court determined
that the Department exceeded its statutory authority by including the term condition in the license
and ordered the Department to strike the term condition and issue a license consistent with the
terms of the original permit. After conducting an analysis of this Court’s prior precedent in water
appropriation cases, the district court concluded that,
[g]iven [the] historical precedent, the Court cannot accept the Department’s contention
that Idaho Power, in this case, holds only an inchoate right or the hope of a right, and
is stuck in that legal limbo for as many decades as it may take the Department to
complete the largely ministerial task of issuing the license. By completing a
$39,000,000 project and beneficially appropriating water under that permit for 27
years, Idaho Power clearly holds something more than the mere hope of a water right.
The question is, did the legislature intend to strip away whatever rights Idaho Power
held, simply because the Department could have but did not issue the final “license”
prior to the 1985 enactment? This Court is constrained to conclude the legislature did
not so intend.
5
The petition for judicial review was filed in Washington County in Idaho’s Third Judicial District on April 27,
2009. On December 9, 2009, this Court entered an Administrative Order, to become effective on July 1, 2010,
establishing venue for water rights disputes in the Snake River Basin Adjudication District Court of the Fifth
Judicial District. Neither party thereafter sought a change of venue to that court but it should be noted that any future
dispute of this nature is appropriately venued with that court.
5
Reading I.C. §§ 42-203B(6) and (7) together, the district court determined that a “plain reading
conveys the legislative intent that a term limit be included prior to appropriation of the water to
beneficial use,” and that such a limitation should be included during the permitting process.
Because the court concluded that the Department exceeded its statutory authority by including the
term condition in the license, it declined to address Idaho Power’s constitutional arguments. The
Department timely appealed to this Court.
II.
Issues on Appeal
I. Whether the Department has the authority under I.C. § 42-203B to include a term
condition in a license for hydropower purposes when such a condition was not
included in the original permit?
II. Whether Idaho Power had a vested water right prior to obtaining a license such
that the Department lacked the authority to include a term condition in the license?
III. Whether the Department unreasonably delayed issuing the license to Idaho Power?
IV. Whether the Department exceeded its statutory authority by failing to designate a
specific term of years after which Idaho Power’s license would expire?
V. Whether the Department violated IDAPA 37.03.08.050.03 by including a term
condition in Idaho Power’s license when such a condition was not included in the
original permit?
VI. Whether the Department’s past practice with regard to including term conditions in
permits and licenses demonstrates an understanding that it lacks the authority
under I.C. § 42-203B to include a term condition in a license when such a term
was not included in the original permit?
III.
Discussion
A. Standard of Review
Judicial review of a final decision by the Idaho Department of Water Resources is
governed by the Idaho Administrative Procedure Act (the APA), title 67, chapter 52 of the Idaho
Code. I.C. § 42-1701A(4). In an appeal from a decision of the district court acting in its appellate
capacity under the APA, this Court reviews the agency record independently of the district court’s
decision. Chisholm v. Idaho Dep’t of Water Res., 142 Idaho 159, 161, 125 P.3d 515, 517 (2005).
The Court reviews an appeal from an agency decision based upon the record created before the
agency. I.C. § 67-5277; Chisholm, 142 Idaho at 162, 125 P.3d at 518. The Court does not
substitute its judgment as to the weight of the evidence presented, but rather defers to the agency’s
findings of fact as long as they are supported by substantial and competent evidence. I.C. § 67-
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5279(1); Chisholm, 142 Idaho at 162, 125 P.3d at 518. The interpretation of a statute is a question
of law over which this Court exercises free review. Idaho Conservation League, Inc. v. Idaho State
Dep’t of Agric., 143 Idaho 366, 368, 146 P.3d 632, 634 (2006).
The agency’s action may be set aside if the agency’s findings, conclusions, or decisions (a)
violate constitutional or statutory provisions; (b) exceed the agency’s statutory authority; (c) are
made upon unlawful procedure; (d) are not supported by substantial evidence in the record; or (e)
are arbitrary, capricious, or an abuse of discretion. I.C. § 67-5279(3). In addition, this Court will
affirm an agency action unless a substantial right of the appellant has 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.
B. The Department did not exceed its statutory authority under I.C. § 42-203B
by including a term condition in the license.
The Department’s first argument on appeal is that it did not exceed its statutory authority
by including a term condition in the license because I.C. § 42-203B specifically authorizes the
Department to include such a condition in either a permit or a license. Idaho Power, on the other
hand, argues that the Department exceeded its statutory authority in two ways. First, Idaho
Power asserts that I.C. § 42-203B only gives the Department the authority to include a term
condition at the permitting stage and, therefore, the Department cannot include a term condition
in a license when such condition was not included in the original permit. Secondly, Idaho Power
contends that the Department exceeded its statutory authority by including the term condition in
the license because Idaho Power had a vested water right at the time the water was applied to
beneficial use in 1980—approximately five years before I.C. § 42-203B was enacted. Idaho
Power is incorrect on both counts.
1. The plain language of I.C. § 42-203B gives the Department the authority
to include a term condition in a license even if such a term was not
included in the original permit.
The Department argues that the plain language of I.C. § 42-203B(6) gives the
Department the authority to include a term condition at the permitting stage or the licensing
stage. The Department also asserts that, because the Legislature provided a specific grandfather
provision for licenses that were issued prior to the statute’s enactment but did not include a
similar provision for permits, the Legislature intended to allow the Department to include a term
condition in a license issued after the statute was enacted. Idaho Power responds by arguing that
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the plain language of I.C. § 42-203B(7) requires the Department to add the term condition at the
time the permit is issued, or as soon as is practicable thereafter, indicating a legislative intent that
any term condition must be included prior to the issuance of a license.
When interpreting a statute, this Court’s primary objective is to derive the Legislature’s
intent in enacting the statute. Hayden Lake Fire Prot. Dist. v. Alcorn, 141 Idaho 307, 312, 109
P.3d 161, 166 (2005). Therefore, statutory interpretation begins with the literal language of the
statute. Id. If the statutory language is unambiguous, this Court need not engage in statutory
construction and should apply the statute’s plain meaning. Id. In other words, “[a]n unambiguous
statute must be given its plain, usual, and ordinary meaning.” Flying Elk Inv., LLC v. Cornwall,
149 Idaho 9, 15, 232 P.3d 330, 336 (2010).
In this case, the statute is unambiguous, and it is unnecessary for this Court to engage in
statutory construction because the plain language of I.C. § 42-203B gives the Department the
authority to include a term condition in either a permit or a license. As mentioned above, I.C. §
42-203B(6) provides,
The director shall also have the authority to limit a permit or license for power
purposes to a specific term.
I.C. § 42-203B(6) (emphasis added). The Legislature’s use of the disjunctive “or” specifically
gives the Department the authority to include a term condition at the licensing stage, not just at
the permitting stage as Idaho Power contends. Furthermore, it is important to note that the statute
specifically states, “[s]ubsection (6) . . . shall not apply to licenses which have already been
issued as of the effective date [July 1, 1985] of this act.” I.C. § 42-203B(6). In other words, the
Legislature included a grandfather provision in the statute that prohibits the Department from
adding a term condition in any license issued prior to the statute’s enactment. Importantly, the
Legislature did not include any provision limiting the Department’s authority to insert a term
condition in a license, such as Idaho Power’s, that is issued after the statute was enacted.
Moreover, the plain language of I.C. § 42-203B(7) reaffirms the Department’s authority
to include a term condition in a license. The first sentence of subsection (7) provides,
The director in the exercise of the authority to limit a permit or license for power
purposes to a specific term of years shall designate the number of years through
which the term of the license shall extend . . . .”
I.C. § 42-203B(7) (emphasis added). This subsection expressly indicates that the Department can
exercise its authority to limit hydropower rights at either the permitting or licensing stage.
8
Consequently, because the plain language of I.C. §§ 42-203B(6) and (7) demonstrates that the
Department has the authority to include a term condition in a permit or license, the Department
did not exceed its statutory authority when it included the term condition in the license for water
right no. 03-7018.
Idaho Power contends that the last paragraph of I.C. § 42-203B(7) requires the
Department to include a term condition at the time the permit is issued, or at least before the
water is put to beneficial use. According to the last paragraph of I.C. § 42-203B(7),
The term of years shall be determined at the time of issuance of the permit, or as soon
thereafter as practicable if adequate information is not then available. The term of
years shall commence upon application of water to beneficial use. The term of years,
once established, shall not thereafter be modified except in accordance with due
process of law.
I.C. § 42-203B(7). Idaho Power is correct that this part of the statute demonstrates the
Legislature’s intent to have the term condition included in the permit, or as soon thereafter as is
practicable. However, the language in the last paragraph of subsection (7) does not support Idaho
Power’s conclusion that the Department is prohibited from including a term condition in a
license that was issued after the statute was enacted. It appears that the last paragraph of
subsection (7), indicating that the term of years should be established at the time the permit is
issued, is meant to address those circumstances where a permit has not yet been issued. In other
words, the last paragraph of subsection (7) is forward-looking and is meant to apply to all
permits issued after the effective date of the statute. Again, this is supported by the fact that the
Legislature chose to include a grandfather provision for those licenses that had already been
issued prior to the statute’s enactment, but chose not to include a similar grandfather provision
for existing permits or licenses that had not yet been issued. Therefore, it appears that the
Legislature intended, by adding the words “or license” to both subsections (6) and (7), for the
Department to be able to go back and include a term condition in licenses that had yet to be
issued at the time the statute was enacted. Consequently, the Department had the authority, based
on the plain language of I.C. § 42-203B, to include a term condition in Idaho Power’s license,
even though such a condition was not included in the original permit.
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2. The Department did not exceed its statutory authority by including a term
condition in Idaho Power’s license because Idaho Power had not yet obtained
a vested water right.
Idaho Power argues that it had a protected water right at the time in which it applied the
water to beneficial use and, thus, the Department exceeded its statutory authority by including a
term condition in the license. In other words, it appears that Idaho Power is arguing that it
obtained a vested water right akin to a license prior to the effective date of the statute, and
because the statute specifically prohibits the Department from including term conditions in
licenses issued prior to the statute’s enactment, the Department lacked the authority to include
the term condition in Idaho Power’s license. On the other hand, the Department argues that Idaho
Power did not have a vested right in the water until it received the license from the Department.
The question of the precise point in time that a water right vests under the statutory
method is an issue of first impression before this Court. Prior to 1971, water users could
appropriate water in the state of Idaho through the constitutional method of diversion and
application to a beneficial use. See, e.g., Cantlin v. Cater, 88 Idaho 179, 186, 397 P.2d 761, 765
(1964). Without a need to obtain a permit or license, a legal appropriation could be made “[b]y
actually diverting and applying water to a beneficial use.” Id. However, in 1971 the Legislature
amended I.C. §§ 42-103 and 42-201 to require water users to comply with the statutory method
of appropriating water. As set forth in I.C. § 42-103, “[t]he right to the use of the unappropriated
waters of rivers, streams, lakes, springs, and of subterranean waters or other sources within this
state shall hereafter be acquired only by appropriation under the application, permit and license
procedure as provided for in this title . . . .” I.C. § 42-103. (emphasis added)
I.C. § 42-103 specifically requires an individual wishing to appropriate water to abide by
the statutory procedures laid out in title 42 of the Idaho Code before obtaining a water right, and
no longer allows water to be appropriated via the constitutional method. I.C. § 42-103; Fremont-
Madison Irr. Dist. & Mitigation Group v. Idaho Ground Water Appropriators, Inc., 129 Idaho
454, 456, 926 P.2d 1301, 1303 (1996). The first step under the statute is for the applicant to
apply to the Department for a permit. I.C. § 42-202. Next, the Department publishes notice of the
proposed diversion and provides interested parties the opportunity to protest the application. I.C.
§ 42-203A. After holding a hearing regarding any protests to the application, the Department
determines whether to grant the permit based on the statutory criteria laid out in I.C. § 42-
203A(5). I.C. § 42-203A(5). If the applicant is granted a permit, the applicant then has a
10
specified period of time to submit proof that the applicant has completed actual construction of
the project and applied the water to full beneficial use. I.C. §§ 42-204 & 42-217. The Department
is then required to conduct a field examination to confirm that the water user has completed
construction and applied the water to beneficial use. I.C. § 42-217. If, based on the proof
submitted by the applicant and the field examination, the Department “is satisfied that the law
has been fully complied with and that the water is being used at the place claimed and for the
purpose for which it was originally intended, the [D]epartment shall issue to such user or users a
license confirming such use.” I.C. § 42-219(1). On the other hand, “[i]n the event that the
[D]epartment shall find that the applicant has not fully complied with the law and the conditions
of permit, it may issue a license for that portion of the use which is in accordance with the
permit, or may refuse issuance of a license and void the permit.” I.C. § 42-219(8).
In considering at which stage in the licensing process an applicant obtains a vested right
in water, this Court has held that an “applicant gains but an inchoate right upon filing of the
application which may ripen into a vested interest following proper statutory adherence.” In re
Hidden Springs Trout Ranch, Inc., 102 Idaho 623, 625, 636 P.2d 745, 747 (1981) (emphasis
added). However, previous Idaho cases have not addressed the precise meaning behind “proper
statutory adherence.” The case law is clear that an applicant does not obtain a vested right at the
point where an application is filed or the point where a permit is obtained. See, e.g., id. (holding
that there is no vested interest upon initiating the statutory appropriation process by filing an
application); A & B Irrigation Dist. v. Aberdeen-American Falls Ground Water Dist., 141 Idaho
746, 753, 118 P.3d 78, 85 (2005) (finding that “a party is not entitled to vested rights in a water
right by virtue of filing a permit application”); Hardy v. Higginson, 123 Idaho 485, 491, 849
P.2d 946, 952 (1993) (holding that “permits only give [the applicant] an inchoate or contingent
right to put the water to a beneficial use”). However, this Court has never considered the
question of whether an applicant obtains a vested right upon receiving the permit and applying
the water to beneficial use.
To determine whether an applicant obtains a vested right upon receiving the permit and
applying the water to beneficial use, it is necessary for this Court to determine what is meant by
prior case law indicating that an inchoate right may ripen into a vested interest “following proper
statutory adherence.” In re Hidden Springs Trout Ranch, Inc., 102 Idaho at 625, 636 P.2d at 747.
There are two possible interpretations of when an applicant has properly adhered to the statute:
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(1) when the applicant does all that is required of it under the statute, regardless of when the
applicant’s statutory compliance is recognized by the Department; or (2) when the procedures
under the Idaho Code for obtaining a license are completed, including the issuance of a license.
We conclude that a water right does not vest until the statutory procedures for obtaining a
license are completed, including the issuance of the license. The progression from the
constitutional method of appropriation—which focused purely on the actions of the
appropriator—to the statutory method of appropriation—which focuses on compliance with the
statute—indicates that the Legislature intended that all procedures under the statute be completed
before an applicant obtains a vested water right. Unlike the constitutional method where only the
applicant is involved, the statutory method requires action by both the applicant and the
Department. Moreover, the statutory scheme for obtaining a license specifically includes
language requiring the Department to ascertain whether an applicant has complied with the law,
as well as any conditions of the permit, before issuing a license. In other words, the
Department’s task in issuing a license is not ministerial because it requires the Department to
engage in a detailed analysis prior to issuing a license. Such a determination is an integral and
essential aspect of the statutory method of appropriation, and must be conducted, and a license
issued, before the applicant obtains a vested water right.
This conclusion is also supported by decisions of the SRBA court. For example, in In re
SRBA Case No. 39576 (Subcase No. 36-08099), slip op., pp. 23–26 (SRBA Ct. Jan. 11, 2000),
the SRBA court ruled that a water right vests at the time a water user receives a license from the
Department. In reaching this conclusion, the SRBA judge reasoned:
[I]t is clear that the legislature intended the issuance of the license to mark the
point at which a water right becomes vested.
...
It is clear from [the] statutory scheme that it is the intent of the legislature that all
of the steps—including issuance of the license—be completed before the water
right vests, and until such time the right to the use of water remains an inchoate
right. Because I.C. § 42-219(6) gives IDWR the responsibility to find the facts as
to whether the permit conditions were complied with, it is untenable to assert that a
water right may vest prior to this step in the permit and licensing process.
12
Id. at 24–25. 6 Therefore, a water right does not vest until all of the statutory steps have been
completed, including obtaining a license. Because Idaho Power did not have a vested right in the
water until the license was issued in 2007, the Department did not exceed its statutory authority
by including a term condition in the license.
C. Idaho Power is not entitled to issuance of a license by operation of law.
Idaho Power argues that the Department impermissibly waited 5 years to complete its
field examination and an additional 22 years to issue the license. Idaho Power asserts that it was
prejudiced by the Department’s delay because its rights were in a state of limbo during the 27
years before the Department issued the license, even though it had done everything it was
required to do under the original permit. Idaho Power argues that because of the delay, this Court
should find that its license became effective as a matter of law on August 7, 1980, when it
submitted proof that the water had been applied to beneficial use and, therefore, the Department
did not have the authority to include the term condition in the license. In other words, if the
Department would have timely granted the license between August 7, 1980, and the time of
enactment of the statute in July of 1985, the Department would not have had the authority to
impose the term condition.
The Department responds by arguing that the delay in issuing the license was reasonable
in light of the Swan Falls controversy and the history of litigation over hydropower water rights
at the Swan Falls Dam. The Department also asserts that Idaho Power was not prejudiced by the
delay because it was allowed to continue using the water to generate power for the entirety of the
27 years.
Idaho Power cites the decision of the SRBA court in Riley v. Rowan, In re SRBA Case
No. 39576 (Subcase No. 94-00012), Memorandum Decision (SRBA Ct. Aug. 28, 1997), for the
proposition that a lengthy delay in issuing a water license entitles a permit holder to a license by
operation of law. In that case, the court held that “where a license is consistent with the terms of
the permit application, the permit, and IDWR’s examination and where IDWR has breached its
duty to timely license the water right, this court deems the license to be effective and in force as
6
The judge also noted authority from other jurisdictions supporting the proposition that a water right does not vest
until a license is issued. See, e.g., Little v. Greene & Weed Inv., 839 P.2d 791, 794 (Utah 1992) (holding that until
the State issues a certificate of appropriation, any right to use the water remains inchoate); Green v. Wheeler, 458
P.2d 938, 940–41 (Or. 1969) (holding that “the legislative assembly intended the water right certificate, not the
permit, even when followed by a beneficial use, to mark the point at which a water right becomes vested”).
13
of the date of proof of beneficial use was submitted.” Id. at 10. The SRBA court’s decision was
appealed to this Court, but we specifically declined “to address whether the IDWR breached its
statutory duty by delaying the issuance of the license.” Riley v. Rowan, 131 Idaho 831, 834, 965
P.2d 191, 194 (1998). The SRBA court’s ruling, requiring issuance of the water license by
operation of law, is not binding on this Court, and Idaho Power has failed to cite any legal
authority from this Court, nor does there appear to be any, indicating that a water user is entitled
to a license by operation of law in the event that the Department delays issuance of the license.
Moreover, this Court is not in a position to grant the relief Idaho Power is requesting in a
judicial review proceeding. Pursuant to I.C. § 67-5279, upon reviewing an administrative appeal,
the Court can either affirm the agency action, or set it aside, in whole or in part, and remand for
further proceedings as necessary. Therefore, even if requiring the issuance of a license by
operation of law was a viable remedy for Idaho Power, this Court would not be in the position to
grant such a remedy in a judicial review proceeding.
Although the delay in issuing the license certainly appears to be much longer than one
would expect, Idaho Power has failed to demonstrate, either before the administrative agency or
on appeal, that the Department’s delay in issuing the license was unreasonable under the
circumstances. On appeal, the Department contends that the delay in this case was justified in
light of the Swan Falls controversy and the history of litigation over hydropower water rights at
the Swan Falls Dam. The controversy between Idaho Power, the State, and other water users
regarding water rights at the Swan Falls Dam was in full force at the time Idaho Power was
making efforts to complete the permit and licensing procedures. Negotiation efforts to resolve
that controversy finally resulted in the parties entering into the Swan Falls Agreement in 1984.
After the agreement, both Idaho Power and the Department were engaged in efforts to pass
legislation, including I.C. § 42-203B, pursuant to the Swan Falls Agreement. After the legislation
was passed, both parties were engaged in the lengthy process of adjudicating all of the various
water rights at the Snake River Basin. 7 The Department’s recommendations with regard to the
7
It was also after the enactment of I.C. § 42-203B that the Department issued the Administrator’s Memorandum
referenced in footnote 4, dealing with the processing of applications for hydropower permits. Of interest in that
document is the language indicating that an applicant can request Department action on a permit application prior to
issuance of a FERC license. This certainly might give an applicant some indication that the Department could also
be requested to move forward on the issuance of a license, particularly if some urgency was involved. Nothing in the
record indicates that Idaho Power requested action by the Department on its licensure between 1985 and 2007, or
that it even inquired about the status of the licensure proceeding.
14
water right at issue in this case were not submitted to the SRBA court until 2006. According to
the Department:
The approach to dealing with the approximately 150,000 water rights claims filed
in the SRBA has been a methodical one, with the Department recommending
water rights on a basin-by-basin approach. The recommendations for the Basin 02
water rights (the basin in which this water right is located) having only been filed
with the SRBA district court in December of 2006.
Consequently, the Department has put forth several colorable justifications for its delay in
issuing the license. On the other hand, Idaho Power submitted no evidence indicating that the
Department’s delay was unreasonable. Thus, even if the Court had the ability to order the
retroactive issuance of a license in a judicial review proceeding, we have no grounds to conclude
that the Department impermissibly delayed issuing the license to Idaho Power.
Furthermore, Idaho Power has failed to demonstrate that it suffered any prejudice as a
result of the delay. The issue of whether a substantial right of Idaho Power had been prejudiced
by the Department’s action, within the meaning of I.C. § 67-5279(4), was not addressed by the
court below and, therefore, will not be addressed by this Court. However, Idaho Power’s counsel
asserted at the oral argument of this case that Idaho Power had sustained prejudice as a result of
the Department’s failure to timely issue the license. It was asserted that the company’s
investment in the fifth power generating unit at Brownlee Dam, for which this water right was
intended, was based on the expectation of obtaining a long-term license and that the failure to
issue the license was detrimental to such investment expectations. However, counsel admitted
that, as things turned out, the company’s investment-backed expectations were not frustrated
because its use of the water continued through the term of Brownlee’s FERC license—long
enough to realize those expectations. Idaho Power continued to use the water to generate
hydropower for the entire 27 years prior to when the Department issued the license. During this
time, the Department took no action to interfere with Idaho Power’s use of the water. Indeed, if
Idaho Power believed it was being injured by the Department’s delay in issuing the license, it
could have sought a writ of mandamus to compel action by the Department. I.C. § 7-302
provides an avenue for a party “to compel the performance of an act which the law especially
enjoins as a duty resulting from an office, trust or station . . . .” I.C. § 7-302. Because Idaho
Power failed to make any effort to compel the Department to issue the license and because Idaho
15
Power has not shown how it was prejudiced as a result of the delay, Idaho Power’s arguments
regarding the Department’s delay are of no avail.
D. This Court declines to address Idaho Power’s argument that the Department
exceeded its statutory authority by failing to designate a specific term of
years after which the license would expire.
In a footnote in its brief, Idaho Power argues that the Department has the authority under
I.C. § 42-203B to designate a specific term of years through which the term of a hydropower
license will extend, but does not similarly have the authority to provide an indefinite timeframe
in which to review or modify a license. The term condition the Department included in Idaho
Power’s license provides,
The diversion and use of water for hydropower purposes under this license is subject
to review by the Director after the date of expiration of the Federal Energy Regulatory
Commission license for Brownlee Dam. Upon appropriate findings relative to the
interest of the public, the Director may cancel all or any part of the use authorized
herein and may revise, delete or add conditions under which the right may be
exercised.
According to Idaho Power, the Department exceeded its statutory authority by failing to
designate a specific term of years after which the license would expire, 8 and by including
language that would allow the Department to continually review the license at any time. 9
8
I.C. § 42-203B(6) provides the Department director authority to “limit a permit or license for power purposes to a
specific term.” This would seem to require that a specific number of years be stated in the license, or perhaps to
require the license to specify that the term of the water right is linked to the term of a specific FERC license for the
hydropower-generating facility in question. The term in the condition included in license no. 03-7018 is difficult to
determine. When asked at oral argument before this Court what the term of the license was, counsel for the
Department indicated that it was for the term of the FERC license. The problem is that the FERC license expired in
2005, while the water license was issued two years later. Idaho Power’s counsel stated at oral argument that the
FERC license has since been renewed on a year-to-year basis while the relicensing proceeding progresses and that it
is anticipated Idaho Power will received a 30 or 50 year license at the conclusion of that proceeding. Several
questions present themselves. Did the license expire in 2005 when the previous FERC license expired? Does the
license continue with each yearly extension of the FERC license? Does the license continue so long as Brownlee
Dam is under licensure by FERC? The issue pertaining to the exact term of this license has not been properly
brought before the Court on appeal and, indeed, neither party has provided information or argument regarding what
the specific term of the license is. Therefore, we do not address it and, if either party wishes to do so, the matter
must be determined elsewhere.
9
In the footnote in its appellate brief, Idaho Power argues that the term condition is “unconstitutional as the
language inserted is vague, indefinite, arbitrary and capricious, and reserves the [D]epartment broad unlimited
discretion in the exercising of its powers and canceling of Idaho Power’s license on a whim, without due process.”
The second sentence of the challenged condition, which purports to give the Department director the ability to
revise, delete or add conditions, or to cancel all or any part of the use upon expiration of the FERC license for
Brownlee Dam, does not appear to be authorized by anything contained within I.C. § 42-203B. The Department
argues that this part of the term condition is required by the public interest and, in addition, is beneficial to Idaho
Power in that it will not have to seek relicensing for its hydropower right upon expiration of the license term, will
not have to pay additional fees for a new application, and so on. Despite its altruistic intentions, the Department has
16
We decline to address these issues because they were not properly raised, nor did either
party adequately address them, on appeal. Idaho Power devotes only a footnote in its appellate
brief to a discussion of these issues, and neither issue is adequately supported by legal authority
or argument as required by I.A.R. 35(b)(6). Idaho Appellate Rule 35 requires parties to an appeal
to adequately address each issue raised with argument, legal authority, and citation to the record.
Therefore, we decline to consider any objection to the language of the term condition.
E. This Court declines to consider Idaho Power’s argument that the
Department violated IDAPA 37.03.08.050.03 by including a term condition in
the license because the issue is raised for the first time on appeal.
In addition to arguing that the Department exceeded its statutory authority and violated
the provisions of I.C. § 42-203B, Idaho Power also asserts that the Department violated its own
water right appropriation rule, IDAPA 37.03.08.050.03, by including the term condition in the
license when the same term was not included in the original permit.
We decline to address this issue because Idaho Power did not raise it below and,
therefore, the district court did not have the opportunity to rule on it. “It is well established that
in order for an issue to be raised on appeal, the record must reveal an adverse ruling which forms
the basis for an assignment of error.” Krempasky v. Nez Perce County Planning and Zoning, 150
Idaho 231, 236, 245 P.3d 983, 988 (2010). “Issues not raised below but raised for the first time
on appeal will not be considered or reviewed.” Id. Because Idaho Power’s argument regarding
the Department’s alleged violation of IDAPA 37.03.08.050.03 was not raised before the district
court, it will not be addressed on appeal.
F. This Court declines to conduct a historical review of the other hydropower
permits and licenses issued by the Department because such documents are
not in the record and are not relevant to this appeal.
In its briefing, Idaho Power discusses four hydropower licenses containing a term
condition that the Department issued prior to issuing license no. 03-7018 in this case. Idaho
Power attached all four permits and corresponding licenses to its brief as addenda. According to
not set out the statutory authority for inclusion of this rather wide-ranging provision. On the other hand, Idaho
Power has failed to adequately articulate precisely how the provision violates its due process rights and has failed to
support its argument with relevant legal authority. The only legal authority Idaho Power cites to support its
argument is State v. Korsen, 138 Idaho 706, 712, 69 P.3d 126, 132 (2003). Curiously, Idaho Power cites Korsen for
the proposition that “[t]o prove a statute is unconstitutional “as applied,” the party must only show that, as applied to
the defendant’s conduct, the statute is unconstitutional,” even though it does not appear Idaho Power is challenging
the constitutionality of the statute in this case. Since neither party has submitted adequate record or authority to
consider issues relating to the second sentence of the term condition, we decline to address them here.
17
Idaho Power, in each of these licenses the term condition was included in the original permit, or
was added to the permit prior to licensing. Idaho Power argues that the Department’s past
practice with regard to including term conditions demonstrates its understanding that it lacks the
authority under I.C. § 42-203B to include a term condition in a license when such term was not
included in the original permit.
We decline to address Idaho Power’s argument because the past permits and licenses
Idaho Power relies on to support its argument are not a part of the record on appeal. This Court
reviews an appeal from an agency decision based upon the record created before the agency. I.C.
§ 67-5277; Chisholm, 142 Idaho at 162, 125 P.3d at 518. Idaho Appellate Rule 30 allows either
party to file a motion requesting that the appellate record be augmented, and sets forth the
relevant procedures to be followed in order to so. The licenses and permits found in Addenda 1
through 5 of Idaho Power’s brief are not a part of the agency record on appeal, nor has Idaho
Power sought to augment the record to include such documents pursuant to I.A.R. 30.
Furthermore, the Department’s decision regarding whether or not to add a term condition
to a permit or license in other cases is not relevant to this appeal. Just because the Department
may have decided not to exercise its authority to add a term condition in a license in another
case, does not mean that the Department lacks the authority to implement such a term condition
in this case. Therefore, we decline to review other water right permits and licenses issued by the
Department as Idaho Power requests.
IV.
Conclusion
The Department had the statutory authority under Idaho Code § 42-403B to include a term
condition in Idaho Power’s license even though such a condition was not included in its permit.
Therefore, the district court’s order requiring the Department to strike the term condition from the
license is reversed. 10 Costs on appeal are awarded to the Department.
Chief Justice EISMANN and Justices BURDICK, W. JONES and HORTON CONCUR.
10
It is worth noting that the district court did not have the authority to issue an order requiring the Department to
strike the term condition from the license and to reissue the license pursuant to the terms of the permit and consistent
with the district court’s opinion. Pursuant to I.C. § 67-5279, “[i]f the agency action is not affirmed, it shall be set
aside, in whole or in part, and remanded for further proceedings as necessary.” In other words, the district court had
the authority to set aside the Department’s decision to include the term condition in the license, but lacked the
authority to order the Department to strike the condition and reissue the license.
18