Rangen, Inc. v. Idaho Department of Water Resources

IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 43370
IN THE MATTER OF THE FOURTH )
MITIGATION PLAN FILED BY THE )
IDAHO GROUND WATER )
APPROPRIATORS FOR THE )
DISTRIBUTION OF WATER TO WATER )
RIGHT NOS. 36-02551 & 36-07694 IN THE )
NAME OF RANGEN, INC., IDWR )
DOCKET NO. CM-MP-2014-006, “MAGIC )
SPRINGS PROJECT”. )
--------------------------------------------------------
)
RANGEN, INC., )
)
Petitioner-Appellant, ) Boise, April 2016 Term
)
v. ) 2016 Opinion No. 44
)
IDAHO DEPARTMENT OF WATER ) Filed: April 26, 2016
RESOURCES, and GARY SPACKMAN, in )
his capacity as Director of the Idaho ) Stephen W. Kenyon, Clerk
Department of Water Resources, )
)
Respondents-Respondents, )
)
and )
)
IDAHO GROUND WATER )
APPROPRIATORS, INC., )
)
Intervenor-Respondent. )
______________________________________ )
Appeal from the District Court of the Fifth Judicial District of the State of Idaho, Twin
Falls County. Hon. Eric J. Wildman, District Judge.
The decision of the district court is affirmed.
May, Browning, and May, PLLC, Boise, Haemmerle Law Office, PLLC, Hailey,
and Brody Law Office, PLLC, Rupert, for appellant Rangen, Inc. J. Justin May
argued.
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Honorable Lawrence G. Wasden, Idaho Attorney General, Boise, for respondents
Idaho Department of Water Resources and Gary Spackman. Garrick L. Baxter
argued.
Racine Olson Nye Budge & Bailey Chartered, Pocatello, for
intervenor/respondent Idaho Ground Water Appropriators, Inc. Randall C. Budge
argued.
_____________________
J. JONES, Chief Justice
This is an appeal from an order issued by the District Court of Twin Falls County,
affirming in part an order issued by the Director of the Idaho Department of Water Resources
(“IDWR”). In response to a delivery call filed by Rangen, Inc., the Director had issued an order
curtailing certain junior-priority ground water pumping in the Eastern Snake Plain Aquifer
(“ESPA”). The order provided that the junior-priority ground water users could avoid
curtailment by participating in an approved mitigation plan. The Idaho Ground Water
Appropriators, Inc. (“IGWA”) filed several mitigation plans for approval. The Director issued an
order conditionally approving IGWA’s Fourth Mitigation Plan, which proposed leasing water
from another surface water right holder and piping the water to the Rangen facility. Rangen
petitioned for review. The district court upheld the Director’s order in significant part. Rangen
appealed.
I.
FACTUAL AND PROCEDURAL BACKGROUND
On December 13, 2011, Rangen filed a petition for delivery call with IDWR, alleging
that it was not receiving the full amount of water to which it was entitled under its water rights
due to junior-priority ground water pumping in the ESPA. IGWA intervened in the proceeding,
representing ground water districts with members whose water rights might be curtailed in
response to Rangen’s delivery call. On January 29, 2014, the Director concluded that junior-
priority ground water pumping was materially injuring Rangen’s water rights, and he issued an
order curtailing certain junior-priority ground water pumping in the ESPA.
The order provided that junior-priority ground water users could avoid curtailment by
participating in an approved mitigation plan that provided Rangen with 9.1 cfs of water. The
Director ordered that mitigation may be phased in over a five-year period. If phased in,
mitigation would need to provide Rangen with 3.4 cfs of water the first year, 5.2 cfs the second
2
year, 6.0 cfs the third year, 6.6 cfs the fourth year, and 9.1 cfs the fifth year. From February to
August 2014, IGWA filed several mitigation plans for approval.1
At issue is IGWA’s Fourth Mitigation Plan, which proposed the Magic Springs Project.
Under the Magic Springs Project, IGWA was to lease or purchase the right to pump 10.0 cfs of
first use water from SeaPac of Idaho, Inc. (“SeaPac”) at its Magic Springs Facility and pipe the
water two miles to the facility owned by Rangen. IGWA and SeaPac executed a letter of intent
stating that SeaPac would lease or sell IGWA 10 cfs of first use water from SeaPac’s water right
no. 36-7072. According to the agreement, IGWA would pay all the costs to construct and
maintain the pipeline, pump station, and other facilities needed to deliver the water to Rangen.
Additionally, the agreement was contingent on IGWA obtaining an order approving a transfer of
the place of use for water right no. 36-7072. On September 10, 2014, IGWA submitted an
Application for Transfer of Water Right (“Application for Transfer”) to add the Rangen facility
as a new place of use for water right no. 36-7072.
The Director held a hearing on IGWA’s Fourth Mitigation Plan on October 8, 2014. On
October 29, 2014, the Director issued an order conditionally approving the plan. The Director
approved IGWA’s Fourth Mitigation Plan on the condition that IGWA obtain approval of its
Application for Transfer. The Director then concluded that the proceeding on IGWA’s
Application for Transfer was a more appropriate forum to consider whether the transfer of water
from Magic Springs to the Rangen facility would cause other water users injury. The Director’s
order also required that IGWA purchase an insurance policy “for the benefit of Rangen to cover
any losses of fish attributable to the failure of the temporary or permanent pipeline system to the
Rangen Facility.” Additionally, the order required that Rangen state in writing whether it would
accept water delivered pursuant to the Magic Springs Project and whether it would allow
construction on its land related to the placement of the pipeline. The order stated that “[i]f the
Fourth Mitigation Plan is rejected by Rangen or Rangen refuses to allow construction in
accordance with an approved plan, IGWA’s mitigation obligation is suspended.”
1
IGWA’s First Mitigation Plan proposed nine possible mitigation activities. The Director approved two of the nine
components: (1) credit for ongoing aquifer enhancement activities and (2) delivery of water through the Morris
exchange agreement. The Director gave a mitigation credit for the first plan, but concluded that with that credit there
was still a mitigation deficiency of 2.2 cfs for the first year. To address the deficiency, IGWA filed its Second
Mitigation Plan, proposing to pipe 9.1 cfs of water from Tucker Springs to Rangen. The Director conditionally
approved the Second Mitigation Plan, but it was withdrawn by IGWA. The Fourth Mitigation Plan was filed to
replace the mitigation anticipated from the second plan. Consideration of IGWA’s Third Mitigation Plan was put on
hold due to the Director’s conditional approval of the fourth plan.
3
On November 25, 2014, Rangen filed a petition for judicial review of the Director’s order
conditionally approving IGWA’s Fourth Mitigation Plan. As relevant here, Rangen appealed the
Director’s decision to defer consideration of potential injury to other water users until the
proceeding on the Application for Transfer. Rangen also argued that the Director erred by
approving a plan with inadequate contingency provisions and that the Director’s order
constituted a taking of Rangen’s property in violation of the Idaho and United States
Constitutions. IGWA intervened in the proceeding.
On February 19, 2015, while judicial review of the order approving the mitigation plan
was pending, the Director entered an order approving IGWA’s Application for Transfer. In that
order, the Director concluded that the transfer would not cause injury to other water right
holders. However, as a condition of approval, the Director required that IGWA continue aquifer
enhancement activities sufficient to offset 10 cfs of depletion of flow in the Snake River between
Kimberly and King Hill. Rangen filed a petition for judicial review challenging in part the
Director’s conclusions on injury. The district court affirmed the Director’s order. Rangen did not
appeal.
On May 13, 2015, the district court affirmed in part the Director’s order conditionally
approving IGWA’s Fourth Mitigation Plan.2 Rangen timely appealed.
II.
ISSUES ON APPEAL
1. Whether the Director erred by deferring consideration of potential injury to other water
users until the proceeding on IGWA’s Application for Transfer.
2. Whether the Director erred by approving a mitigation plan with inadequate contingency
provisions.
3. Whether the Director’s order conditionally approving the mitigation plan constitutes an
unlawful taking.
III.
STANDARD OF REVIEW
In an appeal from a district court where the court was acting in its appellate capacity
under the Idaho Administrative Procedure Act (“IDAPA”), “we review the decision of the
district court to determine whether it correctly decided the issues presented to it.” Clear Springs
Foods v. Spackman, 150 Idaho 790, 797, 252 P.3d 71, 78 (2011). However, we review the
2
The district court affirmed the Director’s order except for the Director’s recalculation of the mitigation credit
granted to IGWA for the water exchange agreement. This is not at issue on appeal.
4
agency record independently of the district court’s decision. Spencer v. Kootenai Cnty., 145
Idaho 448, 452, 180 P.3d 487, 491 (2008). A reviewing court “defers to the agency’s findings of
fact unless they are clearly erroneous,” and “the agency’s factual determinations are binding on
the reviewing court, even when there is conflicting evidence before the agency, so long as the
determinations are supported by substantial competent evidence in the record.” A & B Irrigation
Dist. v. Idaho Dep’t of Water Res., 153 Idaho 500, 505–06, 284 P.3d 225, 230–31 (2012). “This
Court freely reviews questions of law.” Vickers v. Lowe, 150 Idaho 439, 442, 247 P.3d 666, 669
(2011).
The district court must affirm the agency action unless it finds that the agency’s findings,
inferences, conclusions, or decisions are:
(a) in violation of constitutional or statutory provisions;
(b) in excess of the statutory authority of the agency;
(c) made upon unlawful procedure;
(d) not supported by substantial evidence on the record as a whole; or
(e) arbitrary, capricious, or an abuse of discretion.
I.C. § 67-5279(3); Clear Springs Foods, 150 Idaho at 796, 252 P.3d at 77. Even if one of these
conditions is met, an “agency action shall be affirmed unless substantial rights of the appellant
have been prejudiced.” I.C. § 67-5279(4).
Discretionary decisions of an agency shall be affirmed if the agency (1) perceived the
issue in question as discretionary, (2) acted within the outer limits of its discretion and
consistently with the legal standards applicable to the available choices, and (3) reached its own
decision through an exercise of reason. Haw v. Idaho State Bd. of Med., 143 Idaho 51, 54, 137
P.3d 438, 441 (2006). “If the agency action is not affirmed, it shall be set aside, in whole or in
part, and remanded for further proceedings as necessary.” I.C. § 67-5279(3).
IV.
ANALYSIS
The Director of IDWR has the authority to supervise the distribution of water within
water districts and to adopt rules and regulations as necessary to carry out this duty. I.C. §§ 42-
602, 42-603. Pursuant to this authority, IDWR promulgated the Conjunctive Management Rules
(“CMRs”) to provide the procedures for responding to delivery calls made by the holder of a
senior-priority surface or ground water right against the holder of a junior-priority ground water
right. IDAPA 37.03.11.000 and 001. Under CMR 40.01, when it is found that junior-priority
ground water pumping is causing a senior right holder material injury, the Director must either:
5
(1) curtail junior-priority ground water pumping to satisfy the senior’s right, or (2) “[a]llow out-
of-priority diversion of water by junior-priority ground water users pursuant to a mitigation plan
that has been approved by the Director.” IDAPA 37.03.11.040.01. A mitigation plan is defined
as:
A document submitted by the holder(s) of a junior-priority ground water right and
approved by the Director as provided in Rule 043 that identifies actions and
measures to prevent, or compensate holders of senior-priority water rights for,
material injury caused by the diversion and use of water by the holders of junior-
priority ground water rights within an area having a common ground water
supply.
IDAPA 37.03.11.010.15.
Rangen challenges the district court’s partial affirmation of the Director’s order
conditionally approving IGWA’s Fourth Mitigation Plan on three grounds. First, Rangen argues
that the Director abused his discretion by deferring consideration of potential injury to other
water users until the proceeding on IGWA’s Application for Transfer. Second, Rangen argues
that the Director erred by approving a plan with inadequate contingency provisions. Third,
Rangen argues that the Director’s order should be set aside because it constitutes an unlawful
taking of Rangen’s property. For the following reasons, we hold that the Director did not err in
conditionally approving IGWA’s Fourth Mitigation Plan, and we uphold the district court’s
partial affirmation of the Director’s order.
A. The Director did not abuse his discretion by deferring consideration of potential
injury to other water users until the proceeding on IGWA’s Application for
Transfer.
CMR 43.03 provides several factors “that may be considered by the Director in
determining whether a proposed mitigation plan will prevent injury to senior rights.” IDAPA
37.03.11.043.03. At issue here are the factors articulated in CMR 43.03.j: “Whether the
mitigation plan is consistent with the conservation of water resources, the public interest or
injures other water rights, or would result in the diversion and use of ground water at a rate
beyond the reasonably anticipated average rate of future natural recharge.” IDAPA
37.03.11.043.03.j. Here, the Director did not address the factors articulated in CMR 43.03.j in his
order conditionally approving IGWA’s Fourth Mitigation Plan. Instead, the Director concluded
that issues of potential injury to other water users due to the transfer are most appropriately
addressed in the transfer proceeding.
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Rangen alleges that the Director was required to consider CMR 43.03.j before approving
the Fourth Mitigation Plan and that the Director did not have discretion to defer consideration
until the proceeding on IGWA’s Application for Transfer. Both IDWR and IGWA contend that it
was within the Director’s discretion to defer consideration.
The plain language of CMR 43.03 states that the Director may consider the factors
articulated in CMR 43.03 when determining whether to approve a mitigation plan. IDAPA
37.03.11.043.03. “This Court has interpreted the meaning of the word ‘may’ appearing in
legislation, as having the meaning or expressing the right to exercise discretion. When used in a
statute, the word ‘may’ is permissive rather than the imperative or mandatory meaning of ‘must’
or ‘shall.’” Rife v. Long, 127 Idaho 841, 848, 908 P.2d 143, 150 (1995) (citation omitted); see
also Boyd-Davis v. Macomber Law, PLLC, 157 Idaho 949, 954, 342 P.3d 661, 666 (2015).
“Administrative rules are interpreted the same way as statutes.” Kimbrough v. Idaho Bd. of Tax
Appeals, 150 Idaho 417, 420, 247 P.3d 644, 647 (2011). A plain reading of CMR 43.03 suggests
that the Director’s consideration of potential injury to other water users is discretionary.
However, Rangen argues that we interpreted this provision to create a mandatory obligation in In
the Matter of Distrib. of Water to Various Water Rights Held By and For the Benefit of A & B
Irrigation Dist., 155 Idaho 640, 315 P.3d 828 (2013) [hereinafter “A & B Irrigation Dist.”].
In A & B Irrigation Dist., this Court held that the Director abused his discretion by failing
to approve a mitigation plan that provided sufficient contingency provisions. 155 Idaho at 654,
315 P.3d at 842. We stated that the CMRs provide “that the Director must consider several
factors to determine whether the proposed plan ‘will prevent injury to senior rights.”’ Id.
(emphasis added). However, we did not conclude that the Director is required to consider all of
the factors listed in CMR 43.03. Rather, we held that some considerations are mandatory, such as
whether a plan provides for sufficient contingency provisions. In concluding that the Director
was required to determine whether a plan had sufficient contingency provisions, we focused on
the language in CMR 43.03.c.
[T]he Rules provide that the Director must consider several factors to determine
whether the proposed plan “will prevent injury to senior rights,” including:
Whether the mitigation plan provides replacement water supplies or other
appropriate compensation to the senior-priority water right when needed
during a time of shortage even if the effect of pumping is spread over
many years and will continue for years after pumping is curtailed. . . . The
mitigation plan must include contingency provisions to assure protection
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of the senior-priority right in the event the mitigation water source
becomes unavailable.
IDAPA 37.03.11.043.03.c. As the district court held, this language is
unambiguous. Thus, while the Rules permit a mitigation plan to “wait and see”
how much water is necessary to protect against material injury, they require that
such plan identify prospective means by which water will be provided in order to
prevent material injury.
Id. (emphasis in original).
CMR 43.03.c specifically provides that a mitigation plan must include contingency
provisions. Unlike CMR 43.03.c, CMR 43.03.j does not include any mandatory language. Where
the language of a rule is plain and unambiguous, this Court must give effect to the rule as
written. See Wheeler v. Idaho Dep’t of Health and Welfare, 147 Idaho 257, 263, 207 P.3d 988,
994 (2009) (applying the same principle to the interpretation of a statute). Under a plain reading
of CMR 43.03, the Director’s consideration of the potential injury factors articulated in CMR
43.03.j is discretionary.
Additionally, Rangen’s assertion that the Director approved a mitigation plan without
considering potential injury to other water users is inaccurate. CMR 43.02 requires the Director
to consider a mitigation plan under the procedural provisions of Idaho Code section 42-222.
IDAPA 37.03.11.043.02. Section 42-222 provides that an approval may be granted “in whole, or
in part or upon conditions.” I.C. § 42-222(1). In this case, the approval of IGWA’s Fourth
Mitigation Plan was expressly conditioned on the approval of its Application for Transfer. The
Fourth Mitigation Plan would not have been approved if the Application for Transfer was denied
because the Director found the transfer would injure other water users.
As articulated by the district court, the Director’s determination that the transfer
proceeding was the proper place to consider potential injury was reached through reason.
It is understandable that the Director would, in his discretion, refrain from
engaging in a full blown transfer and injury analysis in the context of the
administrative proceeding on the mitigation plan under these circumstances . . .
The Director’s approval of the fourth mitigation plan was made in part contingent
upon the approval of the transfer. Given the nature of the transfer proceeding,
notice and the opportunity to be heard would need to be afforded to a lot more
water users than just those who were already a party to the administrative
proceeding on the fourth mitigation plan.
We agree with the reasoning of the district court and conclude that it was reasonable for the
Director to defer consideration of potential injury to other water users until the transfer
proceeding because it afforded more water users an opportunity to be heard.
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Rangen alleges that the Director’s decision to defer consideration of potential injury until
the transfer proceeding was unreasonable for two reasons. First, Rangen alleges that the Director
was not likely to find injury in the proceeding on IGWA’s Application for Transfer because, by
that time, the pipeline was already built and delivering water to Rangen. Second, Rangen argues
that the injury analysis in a transfer proceeding is different than the analysis required under CMR
43.03.j because the Director was not required to consider the effect of “aquifer mining.”
As to the first argument, Rangen alleges that the Director’s decision to defer the injury
determination effectively made the approval of the transfer application a foregone conclusion.
Rangen believes that there was no way that the Director would approve the Fourth Mitigation
Plan then deny the transfer application after the pipeline had already been constructed and was
delivering water. It is true that water was being piped to the Rangen facility before the
Application for Transfer was approved. While the application was pending, IGWA obtained
approval to rent water from the Water Supply Bank to pump to the Rangen facility. Rangen
alleges that the water bank rental enabled pumping to begin under the Fourth Mitigation Plan
without an analysis of CMR 43.03.j factors. However, in approving the rental, the Director
specifically considered the potential injury to other right holders. Whether the Director erred in
approving the rental is not an issue currently before the Court as Rangen’s Petition to Revoke
Rental Agreement is currently pending before the Director.
Additionally, it is unclear how Rangen would have standing to speak on behalf of other
water users. As discussed above, deferring consideration of potential injury until the transfer
proceeding gave more water users an opportunity to be heard. If other water users felt that the
proceeding on the Application for Transfer was biased by the construction and use of the
pipeline, they had an opportunity to raise that issue in the transfer proceeding.
Rangen’s argument also fails to consider the time constraints at issue in this proceeding.
Under the curtailment order, junior-priority ground water pumpers were required to provide
Rangen with 3.4 cfs of water in the first year. After considering the mitigation credit for IGWA’s
First Mitigation Plan, the Director found that there was a deficiency of 2.2 cfs from January 19,
2015 to March 31, 2015. In order to protect Rangen’s rights, the Director required that the Fourth
Mitigation Plan be completed and provide 2.2 cfs of water to Rangen before January 19, 2015 or
junior-priority ground water pumpers would face curtailment. The order approving the Fourth
Mitigation Plan was entered on October 29, 2014, leaving IGWA less than three months to
9
satisfy the 2.2 cfs mitigation deficiency. Allowing construction of the pipeline before approval of
the Application for Transfer was reasonable under these circumstances. IGWA bore the risk that
the transfer application would not be approved. Additionally, Rangen points to no evidence in
the record tending to show that allowing construction and use of the pipeline biased the
Director’s injury analysis in the transfer proceeding.
Second, Rangen argues that the injury analysis conducted in the transfer proceeding was
pursuant to Idaho Code section 42-222, and, unlike CMR 43.03.j, section 42-222 does not
require that the director consider the effect of “aquifer mining.” Rangen argues that the Director
failed to consider that the Fourth Mitigation Plan does not address the impact of junior-priority
ground water pumping on the ESPA or ensure that aquifer withdrawal does not exceed recharge.
CMR 43.03.j provides that the Director may consider whether the mitigation plan “would result
in the diversion and use of ground water at a rate beyond the reasonably anticipated average rate
of future natural recharge.” IDAPA 37.03.11.043.03.j. However, as discussed above, the
evaluation of that factor falls within the Director’s discretion. Additionally, this factor is largely
irrelevant as the Magic Springs Project does not involve withdrawing ground water from the
aquifer and, therefore, does not result in the diversion and use of ground water. In effect, Rangen
is asking this Court to hold that the Director is required to analyze whether a mitigation plan
prevents withdrawal of water from the ESPA from exceeding recharge even when the plan does
not involve withdrawing water from the aquifer. There is no such requirement.
We hold that the Director acted within his discretion in determining that the transfer
proceeding was the more appropriate forum to address potential injury to other water users
because it afforded more water users an opportunity to be heard. Rangen and other water right
holders had a full and fair opportunity in that proceeding to present argument as to how the
transfer of water from Magic Springs to the Rangen facility might injure other water users. The
approval of IGWA’s Fourth Mitigation Plan was expressly conditioned on approval of the
Application for Transfer. Therefore, we hold that the Director did not abuse his discretion by
deferring consideration of potential injury to other water users until the transfer proceeding, and
we uphold the district court’s affirmation of his decision.3
3
On appeal, Rangen makes several arguments challenging the Director’s finding of no injury in his order approving
IGWA’s Application for Transfer. Although Rangen sought judicial review of the Director’s conclusion that the
transfer would not cause injury, Rangen did not appeal the district court’s affirmation of the Director’s order.
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B. The Director did not approve a mitigation plan with inadequate contingency
provisions.
As provided in CMR 43.03.c, “[a] mitigation plan must include contingency provisions to
assure protection of the senior-priority right in the event the mitigation water source becomes
unavailable.” IDAPA 37.03.11.043.03.c; see also A & B Irrigation Dist., 155 Idaho at 654, 315
P.3d at 842. In considering whether contingency provisions are sufficient, the Director may
consider “[w]hether the mitigation plan provides replacement water supplies or other appropriate
compensation to the senior-priority water right when needed during a time of shortage.” IDAPA
37.03.11.043.03.c.
The Director’s order approving the Fourth Mitigation Plan expressly provided that
“IGWA is required to purchase an insurance policy for the benefit of Rangen to cover any losses
of fish attributable to the failure of the temporary or permanent pipeline system to the Rangen
Facility.” Additionally, the district court found that, in the event mitigation water under the
fourth plan becomes unavailable, curtailment is a contingency to address the mitigation
deficiency. The district court reasoned that in prior cases where the court found a mitigation plan
did not contain adequate contingencies, the Director had expressly stated that he would not
curtail junior-priority ground water pumping if mitigation water became unavailable.
Additionally, in each of those cases there was no secondary mitigation source to address a
mitigation deficiency. In the present case, the district court found that the Director had not stated
that junior-priority ground water pumping would not be curtailed if mitigation water became
unavailable. The district court also concluded that the insurance requirement provided a
secondary mitigation source. The district court ultimately held that curtailment coupled with
insurance was adequate to satisfy CMR 43.03.c.
Rangen first argues that curtailment is not a contingency, but rather, is the natural and
legal consequence that occurs when mitigation is not provided. Additionally, Rangen contends
that curtailment would not be a sufficient contingency because it takes years for the benefit of
curtailment to be realized, and curtailment would not immediately provide the water that Rangen
would have received under the mitigation plan.
Therefore, whether the Director erred in concluding that the transfer would not injure other water users is not
properly before this Court. See I.R.C.P. 84(t)(2)(a).
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Generally, the consequence of failing to operate in compliance with an approved
mitigation plan is curtailment of junior-priority use. IDAPA 37.03.11.040.05. In this case, the
Director has consistently ordered that the mitigation plans proposed by IGWA must deliver the
water required or junior-priority ground water pumpers will face curtailment. If IGWA fails to
meet its mitigation obligation, either through the Fourth Mitigation Plan or another approved
mitigation plan, junior-priority ground water pumping will be curtailed. Although curtailment
alone may not be able to fully protect Rangen’s rights, the insurance requirement coupled with
curtailment is sufficient. Pursuant to the Director’s order, IGWA obtained an insurance policy to
compensate Rangen in the event that the pipeline fails. CMR 43.03.c specifically recognizes that
a contingency provision may provide either replacement water or other appropriate
compensation during a time of shortage. IDAPA 37.03.11.043.03.c. Rangen argues that the
Director is not authorized to award a senior user monetary damages if a mitigation plan is
breached. However, as discussed above, the consequence of IGWA failing to meet its mitigation
obligation is curtailment, not a monetary award. The purpose of the insurance requirement is to
ensure that Rangen is compensated if the pipe system fails—not as an alternate remedy to
curtailment. It is also worth noting that the Director required that IGWA provide redundant
power and pumping systems to reduce the risk of a pipeline failure.
Rangen makes several arguments challenging the sufficiency of the insurance policy
obtained by IGWA. However, this is not the appropriate forum for Rangen to raise the adequacy
of the insurance purchased by IGWA and whether it complies with the Director’s order. As
IDWR and IGWA argue, these issues should be raised with the Director as they concern
implementation of the Director’s requirement, not whether insurance itself is an adequate
contingency under CMR 43.03.c. As Rangen has not brought these issues before the Director,
there is no decision for us to review.4 I.C. § 42-1701A(4) (“Any person who is aggrieved by a
final decision or order of the director is entitled to judicial review.”) (emphasis added).
4
Rangen argues that the Director’s order is fatally flawed because it lacked specificity as to what type of insurance
IGWA was required to purchase. Rangen argues that the Director had an independent duty to review the insurance
purchased by IGWA and determine whether it was sufficient before IGWA began piping water to Rangen. However,
Rangen cites no authority that mandates that the Director scrutinize the insurance purchased where no party filed a
challenge claiming the insurance was inadequate.
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Lastly, Rangen argues that the insurance contingency is insufficient because it only
provides compensation for the loss of fish stock.5 Rangen alleges that if the pipeline stops
delivering water it will suffer lost profits, exposure to liability for breach of contract, and loss of
good will. Additionally, Rangen contends that it will have to make substantial capital
investments in the facility to gear up for delivery of water through the Magic Springs Project and
it would not be able to recoup those losses if the pipeline did not deliver water for a significant
period of time. IGWA contends that whether Rangen would be compensated for these types of
losses depends on the amount of coverage under the policy, an issue Rangen has also not raised
with the Director. The Director’s requirement that IGWA purchase insurance “to cover any
losses of fish attributable to the failure of the temporary or permanent pipeline system” is
adequate. Although the Director does not expressly state that the insurance policy must cover
consequential damages flowing from the loss of fish stock, the order can reasonably be
interpreted that way. Additionally, the insurance policy actually purchased would cover such
losses. The insurance certificate submitted by IGWA expressly states that it covers “losses from
Rangen, Inc. due to failure of the pump system and supply of spring water resulting in loss of
fish stock.” The insurance policy has a coverage limit of $2,000,000. Whether the $2,000,000
coverage limit is adequate to cover such losses is an issue that needed to be raised with the
Director before it would be addressed by this Court.
We affirm the conclusion of the district court that the Director did not approve a
mitigation plan with inadequate contingency provisions because, in this case, curtailment and
insurance are adequate contingencies to satisfy CMR 43.03.c.
C. The Director’s order did not constitute an unlawful taking.
“Article I, section 14 of the Idaho Constitution and the Fifth Amendment of the U.S.
Constitution both prohibit the government from taking private property for public use without
just compensation.” Sopatyk v. Lemhi Cnty., 151 Idaho 809, 816, 264 P.3d 916, 923 (2011)
(footnotes omitted). Rangen’s takings argument focuses on the provision in the Director’s order
which states: “If the Fourth Mitigation Plan is rejected by Rangen or Rangen refuses to allow
construction in accordance with an approved plan, IGWA’s mitigation obligation is suspended.”
5
Rangen also contends that the Fourth Mitigation Plan did not address who would be responsible for the
construction, operation, and maintenance of the pipeline. However, the Director’s order specifically states that
IGWA is responsible for building, operating, maintaining, and monitoring the temporary and permanent pipelines.
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Rangen alleges that the foregoing provision constitutes an unlawful taking because Rangen was
given a choice between the enforcement of the priority of its water rights or the grant of a
property right to IGWA.
The district court held that the provision at issue did not effectuate a taking of Rangen’s
property or mandate that Rangen provide IGWA with an easement or access for the pipeline.
Rather, the district court interpreted the provision as recognizing that condemnation proceedings
would have to be initiated if Rangen refused to allow the pipeline on its property, which would
affect the timeline for mitigation. Additionally, the district court found that the record was clear
that no unlawful taking had occurred. Rangen and various water districts IGWA represents had
entered into a license agreement where, in exchange for valuable consideration, Rangen granted
the districts a license to install, operate, and maintain the pipeline on its property. Additionally,
because of the revocable nature of the agreement, the water districts also initiated condemnation
proceedings against Rangen seeking two easements on Rangen’s property.
On appeal, Rangen argues that the district court erred in concluding that the language of
the order did not require Rangen to grant IGWA an easement or risk losing the water it was
entitled to. Additionally, Rangen contends that the district court should not have considered the
license agreement because the Director’s order forced Rangen to enter into the agreement.
Even if we interpreted the Director’s order to require Rangen to grant IGWA an easement
on its property, that alone would not amount to an unlawful taking. Article I, section 14 of the
Idaho Constitution provides that “rights of way for the construction of canals, ditches, flumes or
pipes, to convey water to the place of use for any useful, beneficial or necessary purpose . . . is
hereby declared to be a public use.” “Private property may be taken for public use, but not until a
just compensation, to be ascertained in the manner prescribed by law, shall be paid.” Idaho
Const. art. I, § 14. Here, it would be within the State’s eminent domain power to obtain a right of
way for the construction of the pipeline.
Rangen has made no allegation that it was not provided just compensation. Additionally,
whether Rangen received just compensation for easements on its property is not ripe for review
as the condemnation proceedings are still pending before the district court. Rangen will have an
opportunity to appeal such a determination once a final judgement is entered in that proceeding.
See I.A.R. 11(a).
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We affirm the district court’s conclusion that the Director’s order did not constitute an
unlawful taking of Rangen’s property.
V.
CONCLUSION
We affirm the district court’s partial affirmation of the Director’s order conditionally
approving IGWA’s Fourth Mitigation Plan.
Justices EISMANN, BURDICK, and HORTON, and Justice Pro Tem WALTERS
CONCUR.
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