IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 34039
LOCHSA FALLS, L.L.C., an Idaho limited )
liability company, )
) Boise, May 2008 Term
Plaintiff-Appellant, )
) 2009 Opinion No. 51
v. )
) Filed: April 7, 2009
STATE OF IDAHO, IDAHO )
TRANSPORTATION BOARD, ) Stephen Kenyon, Clerk
)
Defendant-Respondent. )
)
Appeal from the District Court of the Fourth Judicial District of the State of
Idaho, Ada County. Honorable Michael R. McLaughlin, District Judge.
The judgment dismissing the complaint is vacated and the case is remanded for
further proceedings.
Wilson & McColl, Boise, for appellant. Lisa Rasmussen argued.
Hon. Lawrence G. Wasden, Attorney General, Boise, for respondent. Steven
Parry argued.
_______________________________________________
HORTON, Justice
This is an appeal by Lochsa Falls, L.L.C. (Lochsa Falls), a developer, from an order of
the district court dismissing its complaint against the Idaho Transportation Department (ITD) and
the Board of ITD for failure to exhaust administrative remedies. Because we find that no
administrative remedies were available in the instant case, we vacate the judgment dismissing
Lochsa Falls‟ complaint and remand for further proceedings consistent with this opinion. We
decline to award attorney fees on appeal.
I. FACTUAL AND PROCEDURAL BACKGROUND
Lochsa Falls is the developer of a 254 acre subdivision located along US Highway 20/26
(Chinden Boulevard) between Linder and Ten Mile roads, in Meridian, Idaho. The development
includes approximately 740 residential lots. The development, according to Lochsa Falls‟ traffic
1
consultant, Washington Infrastructure Services, is estimated to generate 12,480 vehicle trips per
day, with 1,396 trips during the peak hour.
In January of 2003, Lochsa Falls presented a preliminary plat of the entire subdivision to
the City of Meridian (the City) for approval. The City approved the preliminary plat. In order to
accommodate the significant increase in traffic at the time of build out, the plat called for an
internal collector street to intersect with Chinden Boulevard.1
Because Chinden Boulevard is designated as a controlled-access highway, ITD required
that Lochsa Falls obtain an encroachment permit. As part of the application process, Lochsa
Falls was required to submit a Transportation Impact Study (TIS). Lochsa Falls‟ traffic
consultant recommended that a traffic signal be installed at one of the two approaches to
Chinden Boulevard. During the encroachment permit application process, the location of the
recommended traffic signal was modified by ITD‟s Chief Engineer. With the exception of the
change in the location of the traffic signal, Lochsa Falls‟ application was approved as submitted
and ITD‟s Chief Engineer issued a temporary encroachment permit on November 19, 2006. That
permit states: “This permit SHALL BE VOID if all work is not completed and the Department
has not made final inspection and approval within one year of the issuance date,” and “Permit
will be considered Temporary until final inspection and approval by a Department
Representative.” (emphasis in original).
Lochsa Falls‟ TIS estimated construction costs for the signal and approach at
approximately $180,000. Accordingly, the encroachment permit included inter alia the
conditions that “Developer shall design and construct a signal prior” and that “[a] Performance
Bond or a Certificate of Deposit in the amount of $180,000.000, shall be provided by the
developer for the signal, prior to any work being done on the highway right of way.”2
After a subdivision receives preliminary plat approval from the City, the developer has
the option of constructing the subdivision in phases. Lochsa Falls elected to construct the
subdivision in twelve phases. Lochsa Falls obtained construction plan approval and final plat
approval for all twelve phases from the City. After all phases of the subdivision were under
construction or complete, including completion of all roadways, and all lots in the subdivision
1
Lochsa Falls also has access to Ada County Highway District streets, which are not at issue in this appeal.
2
In light of this condition contained in the November 19, 2004 encroachment permit, Lochsa Falls‟ assertion that
Lochsa Falls “was not notified that it would be required to install and pay for a traffic signal until February 24,
2005” is somewhat puzzling. Nevertheless, the discrepant dates are not material to our analysis.
2
had been sold except for the 116 lots contained in Phase 12, the City informed Lochsa Falls that
building permits would not be issued until Lochsa Falls complied with ITD‟s requirement that
the signal be paid for by Lochsa Falls.
Under these circumstances, Lochsa Falls believed that it had no option but to agree to pay
the cost of the installation of the signal. Thus, in March 2005, Lochsa Falls submitted to ITD‟s
District Office a letter of credit to cover construction costs. The letter of credit was accompanied
by a cover letter from Brian F. McColl, Lochsa Falls‟ attorney, which stated, in part, that filing
the “letter of credit does not constitute a waiver of . . . Lochsa‟s rights to question the District‟s
authority to require Lochsa Falls to pay for the traffic signal in question.”3 This was the first
indication from Lochsa Falls to ITD that it objected to paying for the cost of the construction of
the signal.
After the new road intersecting Chinden Boulevard was built and the traffic signal was
installed but not operational, Lochsa Falls initiated this litigation on August 30, 2006, seeking to
have ITD reimburse it for expenses it incurred in constructing the traffic signal. ITD has never
accepted nor approved of any portion of the permitted work, including the traffic signal. On the
other hand, ITD never formally denied the permit nor disapproved of the construction.
Lochsa Falls presented three causes of action before the district court arguing that the
requirement it construct the traffic signal was: (1) a disguised and unconstitutional tax, (2) a
taking without just compensation, and (3) a violation of substantive due process and equal
protection of the law. In response, ITD filed a motion for summary judgment requesting that the
district court dismiss Lochsa Falls‟ complaint without prejudice for, inter alia, failure to exhaust
administrative remedies.
The district court dismissed Lochsa Falls‟ complaint without prejudice for failure to
exhaust administrative remedies. The district court further found that that the fee was reasonably
imposed pursuant to valid police power, was rationally related to public safety, and was not an
unconstitutional tax. The district court did not address Lochsa Falls‟ second and third causes of
action in its decision. Lochsa Falls appeals from the district court‟s dismissal of its complaint.
3
Because Lochsa Fall‟s complaint was dismissed on procedural grounds, the issue of waiver was not addressed
below. This issue may be considered on remand.
3
II. STANDARD OF REVIEW
This appeal is from: (1) an order of summary judgment, (2) arising under the Idaho
Administrative Procedures Act (APA), (3) which raises constitutional questions. This Court was
recently faced with a similar situation in American Falls Reservoir Dist. No. 2. v. Idaho Dep’t of
Water Resources, 143 Idaho 862, 154 P.3d 433 (2007) wherein we explained the appropriate
standard of review:
In an appeal from an order granting summary judgment, the standard of
review is the same as the standard used by the district court in ruling on a motion
for summary judgment. Upon review, the Court must liberally construe facts in
the existing record in favor of the nonmoving party, and draw all reasonable
inferences from the record in favor of the nonmoving party. Summary judgment
is appropriate if the pleadings, depositions, and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to a judgment as a matter of law. If there are
conflicting inferences contained in the record or reasonable minds might reach
different conclusions, summary judgment must be denied.
The constitutionality of a statute or administrative regulation is a question
of law over which this Court exercises free review. There is a presumption in
favor of the constitutionality of the challenged statute or regulation, and the
burden of establishing that the statute or regulation is unconstitutional rests upon
the challengers. An appellate court is obligated to seek an interpretation of a
statute that upholds it constitutionality. The judicial power to declare legislative
action unconstitutional should be exercised only in clear cases.
Where an administrative remedy is provided by statute, relief must be
sought from the administrative body and this remedy exhausted before the courts
will act.
Id. at 869, 154 P.3d at 440 (internal citations and quotation marks omitted).
III. ANALYSIS
On appeal we are asked to consider: (1) whether the district court correctly dismissed
Lochsa Falls‟ complaint finding that it was required to exhaust its administrative remedies prior
to filing suit; (2) whether the district court correctly found that ITD and its Board had authority
to require Lochsa Falls to construct the traffic signal at its own cost, and; (3) whether either party
is entitled to attorney fees on appeal.
A. Failure to exhaust administrative remedies
The primary issue in this case is whether Lochsa Falls‟ complaint was properly dismissed
for failure to exhaust administrative remedies. “As a general rule, a party must exhaust
administrative remedies before resorting to the courts to challenge the validity of administrative
4
acts.” KMST, LLC v. County of Ada, 138 Idaho 577, 583, 67 P.3d 56, 62 (2003) (citing Arnzen v.
State, 123 Idaho 899, 906, 854 P.2d 242, 249 (1993)). This Court has recognized two exceptions
to this rule: (a) when the interests of justice so require, and (b) when the agency acted outside its
authority. Regan v. Kootenai County, 140 Idaho 721, 725, 100 P.3d 615, 619 (2004).
The APA requires an exhaustion of the “full gamut” of administrative remedies before
judicial review may be sought. I.C. § 67-5271; Petersen v. Franklin County, 130 Idaho 176,
185, 938 P.2d 1214, 1223 (1997) (quoting Grever v. Idaho Tel. Co., 94 Idaho 900, 903, 499 P.2d
1256, 1259 (1972)); see also Regan v. Kootenai County, 140 Idaho at 724, 100 P.3d at 618;
Westway Constr., Inc. v. Idaho Transp. Dep’t, 139 Idaho 107, 111, 73 P.3d 721, 725 (2003).
Therefore, we first consider whether the APA governs the issuance of an encroachment permit
by the ITD.
1. The APA governs the issuance of an encroachment permit.
The APA governs if the issue at hand arose from a “contested case,” which the APA
defines as “[a] proceeding by an agency . . . that may result in the issuance of an order.” I.C. §
67-5240 (emphasis added); Westway, 139 Idaho at 111, 73 P.3d at 725. Since it is an executive
department of the state government, the ITD is clearly an “agency” within the definition of the
APA. I.C. §§ 40-501 & 67-5201(2); Westway, 139 Idaho at 111, 73 P.3d at 725. The APA
defines an order as “an agency action of particular applicability that determines legal rights,
duties, privileges, immunities, or other legal interests of one (1) or more specific persons.” I.C. §
67-5201(12); Westway, 139 Idaho at 111, 73 P.3d at 725.
This inquiry requires a two-step analysis: (1) Has the legislature granted the agency the
authority to determine the particular issue? and (2) Does the agency decision on the issue
determine “the legal rights, duties, privileges, immunities, or other legal interests” of one or more
persons? Westway, 139 Idaho at 112; 73 P.3d at 726.
This Court must first determine whether the legislature granted ITD the authority to issue
encroachment permits and specify the conditions for the granting of such permits. Id. This
necessarily begins with a consideration of the relevant statutes.
ITD and its Board are granted the following applicable duties and powers by statute:
To “[e]stablish standards for the location, design construction, reconstruction,
alteration, extension, repair and maintenance of state highways . . . .” I.C. § 40-
310(5).
5
To “[d]esignate state highways, or parts of them, as controlled-access facilities
and regulate, restrict or prohibit access to those highways to serve the traffic for
which the facility is intended.” I.C. § 40-310(9).
To “[p]roscribe rules and regulations affecting state highways . . . and enforce
compliance with those rules and regulations.” I.C. 40-312(1).
To “regulate or prohibit the use of any controlled-access highway by any class or
kind of traffic which is found to be incompatible with the normal and safe
movement of traffic.” I.C. § 49-202(23).
Clearly, the legislature has empowered ITD and its Board to make rules and regulations
controlling rights of access to and the safe use of state highways. Furthermore, as to traffic
signals in particular, the legislature has specifically empowered ITD and its Board to:
[E]rect and maintain traffic-control devices on controlled-access highways on
which any prohibitions are applicable. I.C. § 49-202(24).
Furnish, erect and maintain, whenever necessary for public safety and
convenience, suitable signs, markers, signals and other devices to control, guide
and warn pedestrians and vehicular traffic entering or traveling upon the state
highway system. I.C. § 40-313(1).
Pursuant to its grant of authority under I.C. §§ 40-310(9), 40-311(1), 40-312(3), 40-
313(2), and 49-202(19), (23) and (28), 49-221, and 67-5203, the Board of ITD promulgated the
“Rules Governing Highway Right-of-Way Encroachments on State Rights-of-Way.” IDAPA
39.03.42 et seq. These administrative rules provide that, in order “[t]o help preserve the
highways as constructed and provide responsible growth where allowed, any individual,
business, or other entity planning to add, modify, relocate, maintain, or remove an encroachment
on the State highway . . . shall obtain a permit . . .” IDAPA 39.03.42.200.01. These rules
require that any new encroachment to a controlled state highway must comply with the safety
specification and standards specified by ITD and that an application may be denied if it does not.
IDAPA 39.03.42.300.06; 39.03.42.300.09.
The rules lay out the costs an applicant can expect to bear. Under the rules, a permit
application fee is required “based on [ITD‟s] cost to produce the permit and administer the
program.” IDAPA 39.03.42.700.01. The application fee for a major development the size and
type of Lochsa Falls is $100.3 IDAPA 39.03.42.700.02. An application for a major development
3
Lochsa Falls does not challenge ITD‟s authority to require the $100 application fee.
6
like Lochsa Falls must also be accompanied by a full Transportation Impact Study (TIS)
provided and paid for by the developer. IDAPA 39.03.42.301.01.a. The rules provide that:
A TIS shall document the extent of the impact of the proposed development on the State
Highway System, including additional trips, resulting level of service during AM and PM
peaks, and the need for auxiliary lanes or other special capacity or safety features. Any
required changes in traffic control, land use, access, pedestrian, or bicycle usage shall
also be addressed.
IDAPA 39.03.42.301.01.c. ITD reviews the TIS and makes the final decision regarding any
requirements. IDAPA 39.03.42.301.02.
Additionally, the rules provide that an applicant “shall pay for any changes or
adjustments of highway features or fixtures brought about by actions, operations or requirements
caused by the applicant” and that “[ITD] may require payment of costs associated with . . .
[c]onstruction of highway modifications or improvements, including but not limited to signals. . .
.” IDAPA 39.03.42.200.06; 39.03.42.700.03.e. The rules also provide that, at the discretion of
ITD, the applicant may be required to secure a performance bond to guarantee completion of the
work in accordance with requirements of the permit. IDAPA 39.03.42.700.03.d.
In appreciation of the specific IDAPA rules and provisions of the Idaho Code as set forth
above, we conclude that the power to impose certain specific conditions upon an application for
an encroachment permit, including, but not limited to, provision of bonds and construction of
traffic signals, is within the scope of the legislature‟s grant of authority to ITD to regulate the
safe use of and access to controlled access highways.
Having so concluded, we must next consider the second part of the test, that is, whether
the agency decision on the issue determines “the legal rights, duties, privileges, immunities, or
other legal interests” of the party. Westway, 139 Idaho at 112, 73 P.3d at 726. Because the
ITD‟s denial or approval of an encroachment permit application determines the legal rights and
interests of a property owner in accessing their property from a state highway, it falls within the
definition of an order. Thus, judicial review of ITD‟s action on an encroachment permit
application is governed by the APA.
2. The applicable rules do not provide for an appeal of conditions imposed in
connection with an encroachment permit.
Typically, exhaustion of administrative remedies is a prerequisite to seeking judicial
review under the APA:
7
The doctrine of exhaustion serves important policy considerations, including
“providing the opportunity for mitigating or curing errors without judicial
intervention, deferring to the administrative process established by the Legislature
and the administrative body, and the sense of comity for the quasi-judicial
functions of the administrative body.” Consistent with these principles, courts
infer that statutory administrative remedies implemented by the Legislature are
intended to be exclusive.
Park v. Banbury, 143 Idaho 576, 579, 149 P.3d 851, 853-854 (2006) (quoting Regan v. Kootenai
County, 140 Idaho at 724, 100 P.3d at 618, internal citations omitted).
The IDAPA rules provide an internal mechanism for an appeal from the denial of an
encroachment permit. This internal appeals process is outlined in IDAPA 39.03.42.003. This
process commences when the applicant notifies the local ITD District Traffic office of the appeal
in written form within thirty days after receipt of notification of the denial. IDAPA
39.03.42.003.01. In the initial appeal process, the District office has 14 working days to review
the appeal. IDAPA 39.03.42.003.03. If the District office does not overturn the initial denial,
the appeal is then forwarded to the State Traffic Engineer who also has 14 working days to
review the appeal. Id. The State Traffic Engineer is required to prepare the appeal for review by
the ITD‟s Chief Engineer. The Chief Engineer is also granted 14 working days to review the
appeal. Id. The appellant must then be notified within seven working days of the Chief
Engineer‟s decision on the matter. Id. If the Chief Engineer affirms the denial of the
application, a secondary appeals process begins. If within thirty days, the appellant then notifies
ITD‟s legal section, the legal section will then initiate an appeal in accordance with the APA and
IDAPA 04.11.01. IDAPA 39.03.42.003.04.
The Right-Of-Way Encroachment Application and Permit issued to Lochsa Falls stated
that the “[p]ermit will be considered Temporary until final inspection and approval by a
Department Representative.” (emphasis in original). Although Lochsa Falls installed the traffic
light, ITD never conducted a final inspection and approved the construction. Nonetheless, the
application was never formally denied nor formally approved. For that reason, Lochsa Falls
argues that it was not required to follow the multi-tiered internal administrative appeals process
set forth in the IDAPA rules before seeking judicial review. We agree.
While “„[p]ursuit of statutory administrative remedies is a condition precedent to judicial
review” under the APA, Park, 143 Idaho at 578, 149 P.3d at 853, failure to exhaust
administrative remedies is not a bar to litigation when there are no remedies to exhaust. In
8
James v. Dep’t of Transp., 125 Idaho 892, 876 P.2d 590 (1994), this Court held that a terminated
employee was not required to exhaust administrative remedies when a statute and the
department‟s grievance procedures did not entitle him to grieve his termination. 125 Idaho at
895, 876 P.2d at 593. This Court did apply the rule requiring exhaustion of administrative
remedies as to the one component of James‟s claim for breach of contract for which there was an
administrative remedy. Id. The clear holding in James is that this Court will not bar litigation
for failure to exhaust administrative remedies when no remedy is available.
Turning to the present action, the administrative rules provide a process whereby a denial
of a permit application can be appealed internally within ITD. However, those rules provide no
mechanism whereby an applicant, whose permit application has been approved subject to the
imposition of additional requirements, can challenge those conditions. In the absence of an
administrative remedy, we conclude that the district court erred in dismissing Lochsa Falls‟
complaint for failure to exhaust administrative remedies. Thus, we vacate the district court‟s
order dismissing Lochsa Falls‟ complaint without prejudice for failure to exhaust administrative
remedies and remand for proceedings consistent with this opinion.4
B. Lochsa Falls’ Constitutional Claims
Lochsa Falls presented three causes of action before the district court. The complaint
stated that the requirement that Lochsa Falls construct a traffic signal was: (1) a disguised and
unconstitutional tax, (2) a taking without just compensation, and (3) a violation of substantive
due process and equal protection of the law. Lochsa Falls contends that the rules allowing ITD
to impose conditions upon a permit application are unconstitutional on their face since ITD was
palpably without jurisdiction to impose taxes or impact fees. Despite having determined that
Lochsa Falls‟ complaint should be dismissed for failure to exhaust administrative remedies, the
district court addressed Lochsa Falls‟ first constitutional challenge and held that the fee was
reasonably imposed pursuant to valid police power, was rationally related to public safety, and
was not an unconstitutional tax. The district court did not consider Lochsa Falls‟ second and
third causes of action in its decision. Accordingly, we will address the sole constitutional
4
The fact that the permit was never formally approved or denied does, however, raise questions beyond a
consideration of whether Lochsa Falls failed to exhaust administrative remedies. The temporary encroachment
permit issued to Lochsa Falls stated: “This permit SHALL BE VOID if all work is not completed and ITD has not
made final inspection and approval within one year of the issuance date.” (emphasis in original). We note that by
operation of IDAPA 39.03.42.200 and 39.03.42.201 and the passage of time, the encroachment permit in question is
void, triggering a requirement for a new permit application. IDAPA 39.03.42.201.03.
9
question addressed by the district court, that is, whether the requirement that Lochsa Falls
construct the traffic signal was a disguised tax.
This court has held that administrative remedies must generally be exhausted before a
district court has jurisdiction to decide constitutional issues. American Falls, 143 Idaho at 871,
154 P.3d at 442. However, because we conclude that the IDAPA rules do not provide any
mechanism whereby Lochsa Falls could have internally challenged the conditions placed upon
the issuance of its temporary encroachment permit, the exhaustion doctrine does not bar
consideration of Lochsa Falls‟ constitutional challenge.
Constitutional challenges come in two forms “facial” and “as applied”:
A party may challenge a statute as unconstitutional “on its face” or “as applied” to
the party‟s conduct. State v. Korsen, 138 Idaho 706, 712, 69 P.3d 126, 132
(2003). A facial challenge to a statute or rule is “purely a question of law.” State
v. Cobb, 132 Idaho 195, 197, 969 P.2d 244, 246 (1998). Generally, a facial
challenge is mutually exclusive from an as applied challenge. Korsen, 138 Idaho
at 712, 69 P.3d at 132. For a facial constitutional challenge to succeed, the party
must demonstrate that the law is unconstitutional in all of its applications. Id. In
other words, “the challenger must establish that no set of circumstances exists
under which the [law] would be valid.” Id. In contrast, to prove a statute is
unconstitutional “as applied”, the party must only show that, as applied to the
defendant‟s conduct, the statute is unconstitutional. Korsen, 138 Idaho at 712, 69
P.3d at 132.
American Falls, 143 Idaho at 870-71, 154 P.3d at 441-442.
On appeal, Lochsa Falls asks this Court to consider whether the district court correctly
found that ITD and its Board had authority to require Lochsa Falls to construct the traffic signal
at its own cost. Lochsa Falls terms its constitutional challenge as “facial.” Despite its attempt to
style its appeal as such, the reality is that Lochsa Falls‟ challenge is “as applied.” Lochsa Falls
has not demonstrated that, under no set of circumstances, the encroachment permit application
rules and process could be constitutionally valid. Rather, Lochsa Falls is specifically challenging
that the rules are unconstitutional as applied to it. The IDAPA rules provide that the Department
may require payment of the costs associated with “[c]onstruction of highway modifications or
improvements, including but not limited to signals. . . .” IDAPA 39.03.42.700.03.e (emphasis
added).
As was discussed above, ITD is statutorily imbued with the police power to regulate the
safe use of and access to state highways. Certainly, Lochsa Falls had no right of access to
Chinden Boulevard; rather, any access is in the nature of a privilege extended by ITD. Entities
10
such as state agencies and municipalities that are statutorily empowered to carry out police
powers, such as ITD, have the discretion to impose regulatory fees in accomplishing their
directives. Brewster v. City of Pocatello, 115 Idaho 502, 504-05, 768 P.2d 765, 767-68 (1988).
However, this authority does not impart the ability to tax. Id. We have previously distinguished
between taxes and fees by noting that fees are for the purpose of regulation whereas taxes are
solely for purposes of raising revenue. Id.
The costs that Lochsa Falls incurred in the instant case were only those costs that
Lochsa Falls itself proposed were necessary to safely connect its development to Chinden
Boulevard, and which were outlined in the TIS that Lochsa Falls prepared and submitted to ITD.
Moreover, ITD received only the $100 application fee Lochsa Falls was required to pay.
Therefore, we conclude the fees that Lochsa Falls complains of were for the purpose of
regulating the safe use of and access to state highways at its development and were not a tax
solely for the purpose of raising revenue.
However, even fees imposed as regulations under police powers must meet a test of
reasonableness and be rationally related to the cost of enforcing the regulations at hand. BHA
Investments, Inc. v. State, 138 Idaho 348, 353, 63 P.3d 474, 479 (2003). Whether such a
requirement is reasonable or rationally related to the impact of a particular development on the
safety of the travelling public requires a case-by-case analysis. As the district court stated in its
memorandum decision, it did not consider the entirety of Lochsa Falls‟ complaints and factual
allegations when it dismissed the complaint solely on procedural grounds:
Although Plaintiff raises constitutional challenges before this Court,
Plaintiff also acknowledged at oral argument that Plaintiff has other complaints
regarding the permit fee imposed by the ITD. Among those being that Lochsa
Falls should not be required to bear the cost for a traffic signal that is benefiting
other developers in the immediate area. This argument, along with Plaintiff‟s
other complaints should be channeled through the administrative appeals process
prior to seeking any form of relief in this Court.
Although we conclude that, generally speaking, it is not an impermissible tax for the ITD
to impose the condition of erecting a traffic signal as a requirement for a developer seeking to be
granted an encroachment permit to a controlled access highway, we express no opinion as to
whether the imposition of the condition was reasonable in light of Lochsa Falls‟ individual
application. The determination of reasonableness must be made by the district court on remand.
11
Because the district court did not consider Lochsa Falls‟ second and third causes of
actions on takings and due process/equal protection, respectively, we do not address those issues
for the first time on appeal and reserve them for the district court‟s consideration on remand with
the benefit of the parties‟ opportunity to further present their arguments and develop the factual
record.
C. Attorney Fees and Costs on Appeal
Both parties request attorney fees and costs on appeal pursuant to I.C. § 12-117. That
statute provides in part:
Unless otherwise provided by statute, in any administrative . . . proceeding
involving as adverse parties a state agency . . . and a person, the court shall award
the prevailing party reasonable attorney‟s fees, witness fees and reasonable
expenses, if the court finds that the party against whom the judgment is rendered
acted without a reasonable basis in fact or law.
We decline to award fees to either party. Because we vacate the district court‟s order
granting ITD summary judgment and dismissing Lochsa Falls‟ complaint it cannot be said that
ITD is the prevailing party. Thus, ITD is not entitled to fees of costs. Although Lochsa Falls is
the prevailing party on appeal, we cannot find that ITD acted without a reasonable basis in fact
or law. Parties are typically required to exhaust administrative remedies before pursuing judicial
review in actions under the APA, as would be the case here if it were not for a procedural void in
the IDAPA rules pertaining to conditions imposed in connection with encroachment permit
applications.
IV. CONCLUSION
We vacate the district court‟s judgment dismissing Lochsa Falls‟ complaint without
prejudice for failure to exhaust administrative remedies. We remand this matter to the district
court for proceedings consistent with this opinion. Costs to appellant.
Chief Justice EISMANN, Justice BURDICK and Justice Pro Tem TROUT CONCUR.
J. JONES, J., concurring in part and dissenting in part.
I concur in the Court‟s opinion, except that I would award attorney fees to ITD. In my
estimation, Lochsa Falls‟ claims contain little substance. While the Court was technically
correct in remanding the constitutional claims (only because the district court did not consider
them), they appear to have less merit than the issues that were decided by this Court. Lochsa
Falls did brief and argue its takings claim but failed to put forth a convincing argument that a
12
compensable taking had occurred. This Justice was left with the abiding feeling that Lochsa
Falls benefitted much more than the State from the transaction at issue.
While Lochsa Falls portrays itself as having been put upon by being required to signalize
an intersection for the benefit of the State and the motoring public, the reality is otherwise. The
salient facts are that Lochsa Falls wished to develop a parcel of property located along a limited
access highway, its traffic consultant recommended and it requested a signalized intersection to
provide subdivision access to and from the highway, it was advised it could have the signalized
intersection if it would pay for the same, it raised no protest to this routine requirement, and
having gotten the benefit it sought Lochsa Falls now wishes to have ITD foot the bill.
This case could appropriately be analyzed in a contractual context. Lochsa Falls requests
that ITD grant it the right to have a signalized intersection to benefit its subdivision. ITD agrees,
provided that Lochsa Falls pays for signalizing the intersection. Lochsa Falls accepts the
proposal without protest and proceeds to perform the signalizing work. Upon completion of the
work, Lochsa Falls unilaterally changes its mind and decides it needs to be paid for the
signalizing, but expresses no intention of giving up the valuable benefit it has derived from the
deal. Lochsa Falls got what it bargained for but does not wish to honor its undertaking to bear
the cost of such benefit. Had Lochsa Falls objected to the requirement that it pay for signalizing
the intersection, it could simply have said “thanks, but no thanks” and done without a signal.
One suspects there is not the slightest chance it would have done so, as the increase in the value
of its lots would substantially outweigh the cost of the traffic signal.
Lochsa Falls portrays the signalized intersection as an improvement to the highway,
benefitting the traveling public. In its brief, Lochsa Falls asserts “had [the Legislature] wanted
developers to pay for the costs to improve highways,” it could have granted ITD the power to
assess impact fees. Lochsa Falls continues, stating that ITD “has decided that developers should
pay for the privilege of having a state highway with a traffic signal abut their property, while the
other traveling public who pass through and benefit from the signal and state highway do not
have to pay for the traffic signal.” From ITD‟s standpoint, adding additional traffic signals to a
well-used limited access highway does not necessarily improve the highway system but, rather,
may slow the passage of traffic along that highway system. As ITD notes in its brief, “[n]either
ITD nor the state highway system receive any benefit from the new intersection. The capacity of
the US highway did not increase, nor are there any improvements to the state highway.” Neither
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is the traveling public benefitted by an additional stoplight, as the traveling public would likely
prefer not to have to stop for the signal or to deal with the additional traffic coming onto the
highway.
Lochsa Falls did correctly state that it is a “privilege” for a developer to have its property
abutted by a state highway with a traffic signal. The fact is that a signalized intersection is a
great benefit to the abutting property, substantially increasing its value. More signalized
intersections are requested than are granted. Lochsa Falls should be pleased that it was able to
obtain one for the benefit of its property and its prospective lot buyers. It essentially obtained a
franchise to stop the flow of traffic to allow its lot buyers to have access to and from the
highway. Rather than being heavily burdened, it has been highly benefitted. And, the benefit
becomes a vested property interest. As ITD points out in its brief, “[w]hen a permittee completes
the requirements for an encroachment permit, then under the ITD rule, it receives a deeded right
of access.” See, IDAPA 39.03.42.300.04. In other words, when the traffic signal and new
intersection are accepted by ITD and the permitting process has been completed, Lochsa Falls
will get a deeded property right to the access.
Because Lochsa Falls has brought and appealed claims without a reasonable basis in fact
or law, I would award ITD attorney fees under Idaho Code § 12-117.
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