IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 36231-2009
VIKING CONSTRUCTION, INC., an )
Idaho corporation, ) Moscow, April 2010 Term
)
Plaintiff-Appellant, ) 2010 Opinion No. 56
)
v. ) Filed: May 28, 2010
)
HAYDEN LAKE IRRIGATION DISTRICT, ) Stephen W. Kenyon, Clerk
an Idaho quasi-municipal corporation, )
)
Defendant-Respondent. )
Appeal from the District Court of the First Judicial District of the State of Idaho,
in and for Kootenai County. The Hon. John P. Luster, District Judge.
The judgment of the district court is vacated.
Scott L. Rose, Boise, for appellant.
James, Vernon & Weeks, P.A., Coeur d‟Alene, for respondent. Susan P. Weeks
argued.
EISMANN, Chief Justice.
This is an appeal from a summary judgment upholding an increase in a connection fee
charged as an “equity buy-in” to hook up to a domestic water system in an irrigation district.
Because there is a genuine issue of material fact as to whether the connection fee was calculated
as the value of that portion of the system capacity that the new user will utilize at that point in
time, we vacate the judgment and remand this case for further proceedings.
I. FACTS AND PROCEDURAL HISTORY
The Hayden Lake Irrigation District (Irrigation District) is an irrigation district that
delivers both irrigation and domestic water. Viking Construction, Inc., (Viking) is a construction
company that builds custom and speculation homes. It owns multiple parcels of land located
within the Irrigation District.
For years, the Irrigation District has charged a fee to connect to its domestic water
distribution system. A portion of the connection fee covers the actual cost of connecting to the
water system, but the majority of the fee is intended to be the cost of buying an equity interest in
the system.
At a regular meeting on September 7, 2004, the Irrigation District increased the
connection fee from $2200 to $2700 effective the following day. Prior to the meeting, Viking
had sixty-five presold homes for delivery after September 8, 2004. Viking had calculated the
sale price of the homes based upon the connection fee being $2200. It asked the Irrigation
District to delay the fee increase, but the District refused to do so.
On December 10, 2004, Viking filed a complaint for declaratory and injunctive relief. It
sought a declaration that the Irrigation District could not charge any connection fees or could not
increase the connection fee, an injunction against doing so, and a judgment for the amount of all
connection fees previously paid by Viking. Both parties filed motions for summary judgment.
The district court granted the Irrigation District‟s motion and entered judgment dismissing the
complaint with prejudice. Viking then timely appealed.
II. ISSUES ON APPEAL
1. Did the district court err in holding that Idaho Code § 43-1909(e) authorizes the Irrigation
District to impose a connection fee?
2. Did the district court err in holding that the amount of the connection fee is reasonable?
3. What does it mean that an irrigation district shall not operate its works primarily as a source
of revenue to the district?
4. Must there be a constitutional provision authorizing the Irrigation District Bond Act?
5. Irrigation district statutes applicable to irrigation works may not apply to domestic water
works.
6. Could the Irrigation District set the connection fee by amending its by-laws?
7. Alleged violation of the Due Process and Equal Protection Clauses of the Fourteenth
Amendment.
8. Does the connection fee violate §§ 2, 4, and 5 of Article XV of the Idaho Constitution?
9. Does the connection fee violate §§ 2, 5, and 6 of Article VII of the Idaho Constitution?
2
10.Does the connection fee violate contracts between the Irrigation District and the federal
government?
11. Is Viking entitled to an award of attorney fees on appeal?
III. ANALYSIS
A. Did the District Court Err in Holding that Idaho Code § 43-1909(e) Authorizes the
Irrigation District to Impose a Connection Fee?
The district court held that the connection fees were authorized by Idaho Code § 43-
1909(e), which provides that the district shall have power “[t]o prescribe and collect rates, fees,
tolls or charges . . . for the services, facilities and commodities furnished by works.” The court
compared this provision with the identical language in Idaho Code § 50-1030(f),1 which this
Court held in Loomis v. City of Hailey, 119 Idaho 434, 807 P.2d 1272 (1991), authorized a city to
collect a sewer and water connection fee. Since there is no basis for giving differing
constructions to the identical language in the two statutes, Idaho Code § 43-1909(e) authorizes
charging a connection fee to connect to an irrigation district‟s domestic water system.
Viking argues that the district court erred in holding that section 43-1909(e) is applicable
in this case. That statute is part of the Irrigation District Domestic Water System Revenue Bond
Act (Irrigation District Bond Act), I.C. §§ 43-1907 to 43-1920. According to Viking, “The
power granted in I.C. § 43-1909(e) is contingent on the issuance of revenue bonds, after and only
after, approval of the electorate.” In support of this argument, Viking cites to remarks by
legislators in the legislative record stating that the purpose of the Act was to permit irrigation
districts to issue revenue bonds for domestic water systems.
“[T]he purpose of an unambiguous statute is not the concern of the courts when
attempting to interpret a statute.” In re Permit No. 36-7200 in Name of Idaho Dept. of Parks and
Recreation, 121 Idaho 819, 824, 828 P.2d 848, 853 (1992). The asserted purpose for enacting
the legislation cannot modify its plain meaning. The scope of the legislation can be broader than
the primary purpose for enacting it. “This Court has stated that when the language of a statute is
definite, courts must give effect to that meaning whether or not the legislature anticipated the
1
The applicable portion of Idaho Code § 50-1030(f) granted any city the power “[t]o prescribe and collect rates,
fees, tolls or charges . . . for the services, facilities and commodities furnished by such works.”
3
statute‟s result.” Id. We do not construe a statute unless its wording is ambiguous. As we stated
in State v. Schwartz, 139 Idaho 360, 362, 79 P.3d 719, 721 (2003) (emphasis added, citations
omitted):
The interpretation of a statute is a question of law over which we exercise
free review. It must begin with the literal words of the statute; those words must
be given their plain, usual, and ordinary meaning; and the statute must be
construed as a whole. If the statute is not ambiguous, this Court does not
construe it, but simply follows the law as written. Unless the result is palpably
absurd, we must assume that the legislature means what is clearly stated in the
statute. If the statute as written is socially or otherwise unsound, the power to
correct it is legislative, not judicial.
Viking has not pointed to any ambiguity in Idaho Code § 43-1909.2 The statute begins,
“In addition to the powers which it may now have, any district shall have power under and
2
The statute provides as follows:
In addition to the powers which it may now have, any district shall have power under and
subject to the following provisions:
(a) To acquire by gift or purchase and to construct, reconstruct, improve, better or extend
any works within or without the district, or partially within or partially without the district, or
within any part of the district, and acquire by gift or purchase lands or rights in lands or water
rights in connection therewith, including easements, rights of way, contract rights, leases,
franchises, approaches, dams and reservoirs; to lease any portion of the excess or surplus capacity
of any such works to any party located within or without the district, subject to the following
conditions: that the capacity shall be returned or replaced by the lessee when and as needed by the
district for the purposes set forth in section 43-1907, Idaho Code, as determined by the district;
that the district shall not be made subject to any debt or liability thereby; and the district shall not
pledge any of its faith or credit in aid to such lessee;
(b) To exercise the right of eminent domain for any of the works, purposes or use
provided by this act, in like manner and to the same extent as provided in section 7-720, Idaho
Code;
(c) To operate and maintain any works within or without the boundaries of the district, or
partially within or without the boundaries of the district, or within any part of the district;
(d) To issue its revenue bonds hereunder to finance, in whole or in part, the cost of the
acquisition, construction, reconstruction, improvement, betterment or extension of any works;
(e) To prescribe and collect rates, fees, tolls or charges, including the levy or assessment
of such rates, fees, tolls or charges against governmental units, departments or agencies, including
the state of Idaho and its subdivisions, for the services, facilities and commodities furnished by
works, and to provide methods of collections and penalties, including denial of service for
nonpayment of the rates, fees, tolls or charges;
(f) To pledge an amount of revenue from works (including improvement, betterment or
extensions thereto, thereafter constructed or acquired) sufficient to pay bonds and interest as the
same shall become due, and to create and maintain reasonable reserves therefor. Such amount
may consist of all or any part or portion of the revenues. In determining the cost, there may be
included all costs and estimated costs of the issuance of bonds, all engineering, inspection, fiscal
and legal expenses and interest which it is estimated will accrue during the construction period and
for six (6) months thereafter on money borrowed or which it is estimated will be borrowed
pursuant to the irrigation district domestic water system revenue bond act; and
4
subject to the following provisions.” It applies to any district. By its terms, it is not limited to a
district issuing bonds, as are, for example, Idaho Code §§ 43-1911 and 43-1912, respectively
begin with the wording “The directors of the district issuing bonds pursuant to this act” and
“Any district issuing bonds under this act.”
Viking also contends that the words “under and subject to the following provisions” limit
the powers granted by Idaho Code § 43-1909 to irrigation districts that have issued revenue
bonds. According to Viking, because the power granted is “under and subject to” subsections (a)
through (g), “[t]he Act clearly demonstrates the legislature‟s express intention for a
comprehensive plan.” Thus, Viking‟s argument is that an irrigation district must exercise all of
the listed powers, or it cannot exercise any of them. Viking cites no authority for so construing a
statute such as section 43-909 that lists powers granted by the legislature, nor is such
construction logical. The statute lists powers that any district may exercise. There is nothing in
the language of the statute requiring an irrigation district to exercise all of the powers in order to
exercise any of them. If that were the proper construction, in order to “operate and maintain any
works,” I.C. § 43-1909(c), the district would also have to “exercise the right of eminent domain,”
I.C. § 43-1909(b), and to “issue its revenue bonds,” I.C. § 43-1909(d), regardless of whether it
desired to acquire more property or finance a project. The district court did not err in holding
that Idaho Code § 43-1909(e) applies to the Irrigation District even though it has not issued
revenue bonds.
B. Did the District Court Err in Holding that the Amount of the Connection Fee Is
Reasonable?
1. Did the district court err in holding that the connection fee was imposed under
the Irrigation District’s proprietary function? Viking argued to the district court that the
connection fee had to be either a regulatory fee or a tax. Because the connection fee does not
bear a reasonable relationship to the cost of enforcing any regulation, Viking asserted that it was
not a regulatory fee, and therefore it could only be a tax. The district court rejected that
argument based upon Loomis v. City of Hailey, 119 Idaho 434, 807 P.2d 1272 (1991). Loomis
(g) To issue bonds for the purpose of refunding any bonds theretofore issued under
authority of the irrigation district domestic water system revenue bond act and to pay accrued
interest and applicable redemption premiums on the bonds to be refunded, pursuant to and in the
manner provided by section 57-504, Idaho Code.
5
recognized three categories of authority that could possibly be applicable and held that the
connection fee was neither a tax nor a regulatory fee, but was a fee imposed pursuant to the
city‟s proprietary function.
The Loomis Court began its analysis by stating, “First, we must determine whether the
connection fee constitutes an impermissible tax.” Id. at 437, 807 P.2d at 1275. The Court stated
that the connection fees would not be construed as taxes if either “the rates, fees and charges
conform to the statutory scheme set forth in the Idaho Revenue Bond Act or [they] are imposed
pursuant to a valid police power.” Id. at 438, 807 P.2d at 1276. “However, if the rates, fees and
charges are imposed primarily for revenue raising purposes they are in essence disguised taxes
and subject to legislative approval and authority.” Id.3
The Loomis Court then addressed whether the connection fee was imposed pursuant to
the city‟s police power. It stated, “Municipalities may impose fees pursuant to its „police
powers‟ to enact regulations for the furtherance of the public health, safety or morals. It is well
established that fees imposed under this „police power‟ must bear some reasonable relationship
to the cost of enforcing the regulation.” Id. at 437, 807 P.2d at 1275.
Finally, the Loomis Court addressed the city‟s power to impose the connection fees under
its proprietary function. “Pursuant to this proprietary function municipalities may construct and
maintain certain public works. . . . It is pursuant to [the Idaho Revenue Bond] Act and a
municipality‟s proprietary function that the City of Hailey derives its authority to charge water
and sewer connection fees.” Id. at 437-38, 807 P.2d at 1275-76.
Thus, this Court held in Loomis that the city imposed the connection fee pursuant to its
proprietary function, not pursuant to its police power.4 The same reasoning applies here. The
district court did not err in holding that the Irrigation District was exercising its proprietary
function when it imposed the connection fee.
3
Article VII, § 6, of the Idaho Constitution states that the legislature can grant “any county, city, town, or other
municipal corporation . . . the power to assess and collect taxes for all purposes of such corporation.” “Irrigation
districts have been held to be municipal corporations for the purposes of art. 7 § 6 of the Idaho Constitution . . . .”
Barker v. Wagner, 96 Idaho 214, 217, 526 P.2d 174, 177 (1974).
4
In Potts Construction Co. v. North Kootenai Water District, 141 Idaho 678, 681, 116 P.3d 8, 11 (2005), we
incorrectly stated that the connection fee in Loomis “was upheld as a valid exercise of police power authority.”
6
2. Did the district court err in holding that the connection fee constituted an equity
buy in? The city in Loomis characterized the connection fee as an “equity buy-in.” This Court
stated that “Idaho‟s statutory scheme does not require a new user to „buy in‟ to the system, nor
does it prohibit such a program.” Loomis, 119 Idaho at 443, 807 P.2d at 1281. The Idaho
Revenue Bond Act at issue in Loomis permitted the city to “prescribe and collect rates, fees, tolls
or charges . . . for the services, facilities and commodities furnished by such works.” Id.; I.C. §
50-1030(f). We held that this statutory language authorized the city to charge new users of the
sewer and water system a connection fee that was more than the actual cost of the physical
hookup. The connection fee could include an amount equal to “the value of that portion of the
system capacity that the new user will utilize at that point in time.” Loomis, 119 Idaho at 443,
807 P.2d at 1281.
The applicable language of Idaho Code § 43-1909(e) is virtually identical to the language
of the Revenue Bond Act quoted above. Section 43-1909(e) permits an irrigation district to
“prescribe and collect rates, fees, tolls or charges . . . for the services, facilities and commodities
furnished by works.” Thus, this section permitted the Irrigation District to charge new users of
the domestic water system a connection fee that included an amount equal to the value of that
portion of the system capacity that the new user will utilize at that point in time.
The Irrigation District had discretion to decide what methodology to use in order to
determine that value. For example, it is entitled to use replacement cost rather than historical
cost as the basis of its calculations. The court‟s limited role is simply to determine whether the
methodology used to determine the value is reasonable and not arbitrary. Loomis, 119 Idaho at
443-44, 807 P.2d at 1281-82. However, for the connection fee to be an equity buy-in, it must be
based upon some calculation designed to determine the value of that portion of the system that
the new user will be utilizing. If there is no attempt to calculate in some manner that value, then
the connection fee is not an equity buy-in regardless of its label.
Viking contended below that the Irrigation District did not base the amount of the
connection fee upon a determination as to the value of the system that a new user would be
utilizing. The district court rejected that argument, stating, “The Board considered the current
value of the existing system, the values and costs to purchase equity into comparable local water
distribution systems, the water management plan of [Irrigation District] with its infrastructure
needs for maintenance, and the engineer‟s analysis regarding system repair and replacement.”
7
The methodology used by the Irrigation District determined the amount of the connection
fee is an issue of fact. On summary judgment, “[a]ll disputed facts are to be construed liberally
in favor of the non-moving party, and all reasonable inferences that can be drawn from the
record are to be drawn in favor of the non-moving party.” Infanger v. City of Salmon, 137 Idaho
45, 47, 44 P.3d 1100, 1102 (2002).
The Irrigation District had appointed an advisory committee that made a recommendation
to the board of directors regarding increasing the connection fee. The chair of the board of
directors attended the meeting at which the advisory committee determined its recommendation
and presided at the board meeting that considered the advisory committee‟s recommendation.
He testified that the advisory committee arrived at its recommendation by reviewing a
“comparative analysis.”
Q. How did the advisory committee come up with the recommendation
for that first to be $2,700?
A. As I recall, there was a comparative analysis.
Q. And comparative between what and what?
A. Between the rates that you see there.
The comparative analysis to which the chair referred was a comparison of the amounts
charged by other irrigation districts for connection fees to their domestic water systems. The
chair went on to testify that neither the board of directors nor the advisory committee engaged an
engineer, accountant, or any other professional to calculate the equity buy-in amount. The board
of directors simply adopted the recommendation of the advisory committee.
Q. . . . What was the rationale, then, for the board on September 7, 2004,
to make that fee $2,700?
....
THE WITNESS: We recognized that the advisory committee had spent
time on this and had put input in, and we felt that that was appropriate utilization
of that committee, and so we took their recommendation.
BY MR. ROSE:
Q. Was there any analysis done by the advisory committee on September
1, 2004 meeting regarding any calculation of buy-in or equity buy-in?
A. I don‟t recall.
....
Q. . . . Did the Hayden Lake Irrigation District board engage an engineer
to calculate the – calculate a equity buy-in dollar amount?
A. No.
8
Q. Did the Hayden Lake Irrigation District engage an accountant to
calculate an equity buy-in amount?
A. No.
Q. Did the Hayden Lake Irrigation District engage any professional to
calculate the equity buy-in amount?
....
A. No.
Q. Okay. Did – on September 7, 2004, had the Hayden Lake Irrigation
District engaged anyone to calculate the equity buy-in amount?
A. They had engaged the advisory committee.
Q. Had the advisory committee, on September 1, 2004, engaged anyone
to calculate the equity buy-in amount that was an engineer?
A. Not to my knowledge.
Q. Did the advisory committee, on September 1, 2004, engage any
accountant to calculate the equity buy-in amount?
A. Not to my knowledge.
Q. Did the Hayden Lake Irrigation District advisory committee, on
September 1, 2004, calculate an equity buy-in amount?
A. They used the comparative analysis, the findings of which are
referenced in Exhibit 29.
The chair later testified as to other documents available to the board when it made its
decision, which were a water management plan and water master reports reflecting water
consumption. He testified that the Irrigation District‟s engineer had also provided some analysis
of “what antiquated, obsolete or marginally functional areas of the district were going to or
presently were substandard or inadequate for anticipated growth.” This additional information
may certainly reflect the District‟s future needs, both for water and for system repairs and
improvements, but there is no evidence that any of such information was related to the applicable
equity.
The chair‟s testimony shows that there is a genuine issue of material fact as to whether
the connection fee was based upon a reasonable method of determining an amount equal to the
value of that portion of the system capacity that the new user will utilize at that point in time, or
whether it was simply based upon what other irrigation districts were charging. Therefore, we
must vacate the grant of summary judgment. Having decided that we must vacate the judgment,
we will decide additional issues raised below by Viking because they are questions of law which
would still need to be decided upon remand. Silver Creek Computers, Inc. v. Petra, Inc., 136
Idaho 879, 883, 42 P.3d 672, 676 (2002).
9
C. What Does It Mean that an Irrigation District Shall Not Operate Its Works Primarily
as a Source of Revenue to the District?
Idaho Code § 43-1907 provides, “No irrigation district shall operate any works primarily
as a source of revenue to the district . . . .” Viking makes various arguments that can be
categorized as contending that the connection fee was imposed primarily as a source of revenue.
Viking contends:
The record reflects the primary purpose of hook-on fees was to pay for
future capital assets and future improvements required due to population growth,
and not for a proportionate purchase of the system‟s current value.
There is nothing limiting the use of the revenue from hook-on fees.
The board in comparison commingled hook-on fees in its general fund
with assessments and tract fees violating the Act.
In contradiction to the clear legislative mandate in I.C. § 43-1907
forbidding operating works primarily as a source of revenue to a district, the
board‟s primary method for obtaining cash reserves is through hook-on fees.
Hook-on fee revenue was banked in the general fund earmarked to be spent, and
was spent on general purposes, and future improvements to and expansion of the
system.
HUD has no revenue bond principal and interest to pay which generates
fees from which to accumulate reserves. The purposes for which fees may be
expended under the Act first requires an irrigation district to issue revenue bonds.
I.C. § 43-1912.
The board spent the revenue without a dedicated purpose in conflict with
the Act.
According to the April 2, 2002, Minutes, “all hook up‟s have been going
into the capital improvement fund for several months.”
What is clear is that the monies were being collected to pay for the
purchase of capital assets to meet the demands of anticipated future growth
benefitting all the lands within HLID‟s boundaries.
The Revenue Bond Act at issue in Loomis provided, “No city shall operate any works
primarily as a source of revenue to the city . . . .” I.C. § 50-1028. If the works were operated
primarily as a source of revenue to the city, then the fees collected would not be allocated and
budgeted in conformity with the Act. Thus, we stated, “[I]f fees are collected under the disguise
10
of the Act and allocated and spent otherwise, then the fees are primarily revenue raising and will
be construed as taxes.” 119 Idaho at 439, 807 P.2d at 1277. The Irrigation District Bond Act
includes an identical provision. Idaho Code § 43-1907 provides, “No irrigation district shall
operate any works primarily as a source of revenue to the district . . . .” Thus, fees collected
under this Act must also be allocated and budgeted in conformity with the Act.
In Loomis, operating the works “primarily as a source of revenue to the city” did not
mean that the connection fee could not exceed the actual cost of the labor and materials
necessary to connect to the sewer and water system. The ordinance imposing the connection fee
at issue in Loomis stated that its intent was to “recover the costs of operating, maintaining,
replacing, and depreciating the existing water and sewer systems and any extensions thereof.”
119 Idaho at 444, 807 P.2d at 1282. We held that “[t]here is nothing in the ordinance that is not
authorized by the Idaho Revenue Bond Act.” Id.
What the Act prohibited was using the sewer and water works primarily as a source of
revenue that the city could use for purposes other than its sewer and water system. Thus, in
resolving whether the connection fees were allocated and budgeted in conformity with the
Revenue Bond Act, we noted, “The proceeds of the connection fee for water and sewer service
are dedicated to those systems.” Id. at 440, 807 P.2d at 1278. The money was not used for the
City‟s other general fund expenditures. We concluded “that under these circumstances a
municipality may collect fees, rates or charges pursuant to the power granted in the Idaho
Revenue Bond Act to pay for maintenance, depreciation and replacement of system
components.” Id. at 441, 807 P.2d at 1279.
In Loomis, we also noted that “[t]he proceeds of the connection fee for water and sewer
service are dedicated to those systems. Those funds are kept in a separate, segregated account
and are not used for general fund purposes.” Id. at 440, 807 P.2d at 1278 (emphasis added). The
important issue was not that the fees were kept in a separate, segregated account. It is that they
were not used for city functions other than the sewer and water systems.
The powers of an irrigation district under the Irrigation District Bond Act include “to
construct, reconstruct, improve, better or extend any works within or without the district” and
“[t]o operate and maintain any works within or without the boundaries of the district.” I.C. § 43-
1909(a) & (c). Spending revenues from connection fees for these purposes would be consistent
with the Act. It would not be consistent with the Act to use connection fees from the domestic
11
water system as a source of revenue for other district functions, such as the irrigation water
system.
Viking argues that Idaho Code § 43-1912 prevents the Irrigation District from
accumulating reserves with the connection fees. That statute applies to “[a]ny district issuing
bonds under this act [I.C. §§ 43-1906 to 43-1920] for the acquisition, construction,
reconstruction, improvement, betterment or extension of any works.” I.C. § 43-1912. It
provides that such districts “shall have the right to appropriate, apply or expend the revenue of
the works for [five listed] purposes,” one of which is to “provide a reserve for improvements to
the works.” I.C. § 43-1912(e). The reference to “the works” means the works for which the
district issued bonds to acquire, construct, reconstruct, improve, better, or extend. Because the
Irrigation District did not issue bonds under the Act, this statute has no application to this case.
The statute cannot be read as only permitting irrigation districts that did issue bonds
under the Act to provide a reserve for improvements to their works. The final sentence of the
statute states, “Unless and until full and adequate provision has been made for the foregoing
purposes, no district shall have the right to transfer the revenue of works to its general fund.” Id.
The intent is to prevent such districts from transferring to their general funds revenues from
works financed with bonds until full and adequate provision has been made for the five listed
purposes, including providing the reserve for improvements to those works.
D. Must There Be a Constitutional Provision Authorizing the Irrigation District Bond Act?
In Loomis, this Court stated, “The Idaho Constitution, art. 8, § 3 allows municipalities to
impose rates and charges to provide revenue for public works projects, and pursuant to this
section of the Constitution, the Idaho legislature enacted the Idaho Revenue Bond Act, codified
at I.C. § 50-1027 through § 50-1042.” 119 Idaho at 437-38, 807 P.2d at 1275-76. Viking argues
that because this Court has held that Article 8, § 3, does not apply to irrigation districts, Barker v.
Wagner, 96 Idaho 214, 218, 526 P.2d 174, 178 (1974), there is no constitutional basis for the
legislature enacting Idaho Code § 43-1909(e), part of the Irrigation District Bond Act.
“Our State Constitution is a limitation, not a grant of power, and the Legislature has
plenary powers in all matters, except those prohibited by the Constitution.” Rich v. Williams, 81
Idaho 311, 323, 341 P.2d 432, 439 (1959). Article 8, § 3, is not a grant of power; it is a
limitation on the power of subdivisions of the State to incur indebtedness. Therefore, there did
12
not need to be any constitutional provision authorizing the legislature to enact the Irrigation
District Bond Act, including Idaho Code § 43-1909(e).
E. Irrigation District Statutes Applicable to Irrigation Works May Not Apply to Domestic
Water Works.
Viking contends that the connection fee violates various statutes applicable to the
construction and improvement of irrigation works in an irrigation district. Without addressing
Viking‟s arguments, we point out the following. In 1899, the legislature adopted “An Act to
Provide for the Organization and Government of Irrigation Districts and to Provide for the
Acquisition of Water and Other Property and for the Distribution of Water Thereby for Irrigation
and Similar Purposes.” 1899 Idaho Sess. Laws 408. In 1903, it repealed that Act and adopted
another in its place entitled, “An Act Relating to Irrigation Districts and to Provide for the
Organization Thereof and to Provide for the Acquisition of Water and Other Property and for the
Distribution of Water thereby for Irrigation Purposes and for Other and Similar Purposes.” 1903
Idaho Sess. Laws 150. The latter enactment, with various amendments and additions, is still the
current law.
In 1946, the legislature expanded the power of irrigation districts to permit them to
contract with the United States or a state agency for the construction, operation, and maintenance
of a domestic water system, I.C. §§ 43-1901 to 43-1905. Ch. 3, § 1, 1946 Idaho Sess. Laws 4
(1st Extraordinary Sess.). Then, in 1988, the legislature enacted the “Irrigation District Domestic
Water System Revenue Bond Act,” which further expanded the powers of irrigation districts
with respect to constructing works to distribute domestic water, I.C. §§ 43-1906 to 43-1920. Ch.
299, § 1, 1988 Idaho Sess. Laws 944. Which statutes are applicable may depend upon whether
the issue concerns irrigation water works, or domestic water works constructed pursuant to a
contract with the federal government or a state agency, or the domestic water works governed by
the “Irrigation District Domestic Water System Revenue Bond Act.” In particular, a connection
fee imposed under Idaho Code § 43-1909(e) is not an assessment under Idaho Code § 43-704.
F. Could the Irrigation District Set the Connection Fee by Amending Its By-laws?
Idaho Code § 43-304 provides that the board of directors of an irrigation district has the
power “to establish equitable by-laws, rules and regulations for the distribution and use of water
13
among the owners of such land.” The Irrigation District imposed the connection fee increase by
amending its by-laws.
In the district court, Viking asserted, “There is no statutory authority granting a board of
directors the unfettered ability to alter, amend or repeal established bylaws.” On appeal, it
contends that section 43-304 only grants the power to “establish” by-laws, not to amend them. It
also contends that the District should not be able to impose a connection fee by amending its by-
laws. Viking makes no reasoned argument as to why the code section should only empower an
irrigation district to adopt an initial set of by-laws that thereafter cannot be amended, nor does it
make any reasoned argument as to why the district could not use its by-laws as the mechanism
for adopting and amending the connection fee. The Irrigation District had the authority to amend
its by-laws and to use them to impose and amend the connection fee.
G. Alleged Violation of the Due Process and Equal Protection Clauses of the Fourteen
Amendment.
Viking argued below that the increase in the connection fee deprived it of property
without due process of law in violation of the Fourteenth Amendment. Viking does not identify
the protected property interest that it was allegedly deprived when the Irrigation District
increased the amount of the connection fee. “To have a property interest in a benefit, a person
clearly must have more than an abstract need or desire for it. He must have more than a
unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.”
Board of Regents of State Colleges v. Roth, 408 U.S. 564, 577 (1972). “Property interests, of
course, are not created by the Constitution. Rather they are created and their dimensions are
defined by existing rules or understandings that stem from an independent source such as state
law-rules or understandings that secure certain benefits and that support claims of entitlement to
those benefits.” Id. Specifically, Viking must show it has a property interest in not having the
connection fee imposed or in having the prior connection fee continue without change, and it
must point to something under Idaho law that creates such a property interest.
Viking also contends that the connection fee also denied it the equal protection of the law
in violation of the Fourteenth Amendment. Viking can bring an equal protection claim as a
“class of one” if it alleges that it “has been intentionally treated differently from others similarly
14
situated and that there is no rational basis5 for the difference in treatment.” Village of
Willowbrook v. Olech, 528 U.S. 562, 564 (2000). Viking must show that, with respect to the
connection fee increase, it has been treated differently from others that are similarly situated.
“„Equal protection‟ . . . emphasizes disparity in treatment by a State between classes of
individuals whose situations are arguably indistinguishable.” Ross v. Moffitt, 417 U.S. 600, 609
(1974).
H. Does the Connection Fee Violate §§ 2, 4, and 5 of Article XV of the Idaho Constitution?
Viking contends that the connection fee violates sections 2, 4, and 5 of Article XV of the
Idaho Constitution. Section 2 provides, “The right to collect rates or compensation for the use of
water supplied to any county, city, or town, or water district, or the inhabitants thereof, is a
franchise, and can not be exercised except by authority of and in the manner prescribed by law.”
There is nothing indicating that the Irrigation District has granted any person or entity a franchise
to supply water to the inhabitants of the District.
Section 4 begins, “Whenever any waters have been, or shall be, appropriated or used for
agricultural purposes, under a sale, rental, or distribution thereof, such sale, rental, or
distribution shall be deemed an exclusive dedication to such use . . . .” (Emphasis added.)6
Section 5 begins, “Whenever more than one person has settled upon, or improved land with the
view of receiving water for agricultural purposes, under a sale, rental, or distribution thereof, as
in the last preceding section of this article provided . . . .” (Emphasis added.)7 In Mellen v.
5
Viking has not pointed to anything indicating that a higher level of scrutiny is applicable. See Tarbox v. Tax
Comm’n, 107 Idaho 957, 959-60, 695 P.2d 342, 344-45 (1984).
6
Article XV, § 4, states:
Whenever any waters have been, or shall be, appropriated or used for agricultural
purposes, under a sale, rental, or distribution thereof, such sale, rental, or distribution shall be
deemed an exclusive dedication to such use; and whenever such waters so dedicated shall have
once been sold, rented or distributed to any person who has settled upon or improved land for
agricultural purposes with the view of receiving the benefit of such water under such dedication,
such person, his heirs, executors, administrators, successors, or assigns, shall not thereafter,
without his consent, be deprived of the annual use of the same, when needed for domestic
purposes, or to irrigate the land so settled upon or improved, upon payment therefor, and
compliance with such equitable terms and conditions as to the quantity used and times of use, as
may be prescribed by law.
7
Article XV, § 5, states:
15
Great Western Beet Sugar Co., 21 Idaho 353, 359, 122 P. 30, 31-32 (1912), we stated with
respect to these two sections:
It was clearly intended that whenever water is once appropriated by any person or
corporation for use in agricultural purposes under a sale, rental or distribution,
that it shall never be diverted from that use and purpose so long as there may be
any demand for the water and to the extent of such demand for agricultural
purposes.
There is no indication that the water in the Irrigation District‟s domestic water system to which
Viking seeks access was appropriated or used for agricultural purposes.
I. Does the connection fee violate §§ 2, 5, and 6 of Article VII of the Idaho Constitution?
Viking contends that the connection fee violates sections 2, 5, and 6 of Article VII of the
Idaho Constitution. Section 2 only applies to the legislature levying taxes, and section 6
prohibits the legislature from imposing taxes “for the purpose of any county, city, town, or other
municipal corporation.”8 There is nothing in the facts indicating that the connection fee was
levied by the legislature. Therefore sections 2 and 6 clearly have no application. Section 5
provides that “[a]ll taxes shall be uniform upon the same class of subjects within the territorial
limits, of the authority levying the tax, and shall be levied and collected under general laws,
Whenever more than one person has settled upon, or improved land with the view of
receiving water for agricultural purposes, under a sale, rental, or distribution thereof, as in the last
preceding section of this article provided, as among such persons, priority in time shall give
superiority of right to the use of such water in the numerical order of such settlements or
improvements; but whenever the supply of such water shall not be sufficient to meet the demands
of all those desiring to use the same, such priority of right shall be subject to such reasonable
limitations as to the quantity of water used and times of use as the legislature, having due regard
both to such priority of right and the necessities of those subsequent in time of settlement or
improvement, may by law prescribe.
8
Article VII, § 2, states:
The legislature shall provide such revenue as may be needful, by levying a tax by
valuation, so that every person or corporation shall pay a tax in proportion to the value of his, her,
or its property, except as in this article hereinafter otherwise provided. The legislature may also
impose a license tax, both upon natural persons and upon corporations, other than municipal,
doing business in this state; also a per capita tax: provided, the legislature may exempt a limited
amount of improvements upon land from taxation.
Article VII, § 6, states:
The legislature shall not impose taxes for the purpose of any county, city, town, or other
municipal corporation, but may by law invest in the corporate authorities thereof, respectively, the
power to assess and collect taxes for all purposes of such corporation.
16
which shall prescribe such regulations as shall secure a just valuation for taxation of all property,
real and personal . . . .”9 As long as the connection fees “conform to the statutory scheme” set
forth in the Irrigation District Bond Act and “are allocated and budgeted in conformity with that
Act,” they are not taxes. Loomis v. City of Hailey, 119 Idaho 434, 438-39, 807 P.2d 1272, 1276-
77 (1991). Whether or not they conform to the statutory scheme and are allocated and budgeted
in conformity with the Act are issues of fact.
J. Does the Connection Fee Violate Contracts Between the Irrigation District and the
Federal Government?
Viking contends that the connection fee violates contracts between the Irrigation District
and the federal government. Pursuant to the federal reclamation laws, the District entered into
contracts with the United States dated February 16, 1949; April 20, 1957; March 19, 1962; and
September 30, 1977, for repairs, improvements and additions to the District‟s irrigation works.
Viking has not shown that those contracts have any application to the District‟s domestic water
works.
K. Is Viking Entitled to an Award of Attorney Fees on Appeal?
Viking requests attorney fees on appeal pursuant to the private attorney general doctrine,
42 U.S.C. § 1988, Idaho Code § 12-117, and Idaho Code § 12-121. To be awarded attorney fees
on appeal under any of those provisions, the party must be the prevailing party on the appeal.
Idaho Press Club, Inc. v. State Legislature of the State, 142 Idaho 640, 646, 132 P.3d 397, 403
(2006) (private attorney general doctrine); Nation v. State, Dept. of Correction, 144 Idaho 177,
194, 158 P.3d 953, 970 (2007); Rollins v. Blaine County, 147 Idaho 729, 732, 215 P.3d 449, 452
(2009) (I.C. § 12-117); and Rhino Metals, Inc. v. Craft, 146 Idaho 319, 322, 193 P.3d 866, 869
(2008) (I.C. § 12-121). Although Viking obtained a vacation of the summary judgment because
there is a genuine issue of material fact, it did not prevail on all of the various other issues it
9
Article VII, § 5, provides:
All taxes shall be uniform upon the same class of subjects within the territorial limits, of
the authority levying the tax, and shall be levied and collected under general laws, which shall
prescribe such regulations as shall secure a just valuation for taxation of all property, real and
personal: provided, that the legislature may allow such exemptions from taxation from time to
time as shall seem necessary and just, and all existing exemptions provided by the laws of the
17
raised regarding the legality of the connection fee. Therefore, we find that both parties prevailed
on appeal and will not award Viking attorney fees or court costs.
IV. CONCLUSION
The judgment of the district court is vacated, and this case is remanded for further
proceedings that are consistent with this opinion. We do not award court costs or attorney fees
on appeal.
Justices BURDICK, J. JONES, W. JONES and HORTON CONCUR.
territory, shall continue until changed by the legislature of the state: provided further, that
duplicate taxation of property for the same purpose during the same year, is hereby prohibited.
18