3G AG LLC v. IDWR ( 2022 )

IN THE SUPREME COURT OF THE STATE OF IDAHO
Docket No. 48769
3G AG LLC, an Idaho limited liability )
company, )
)
Petitioner-Appellant, )
)
v. )
)
IDAHO DEPARTMENT OF WATER )
RESOURCES, )
)
Respondent, )
) Boise, February 2022 Term
and )
) Opinion filed: May 18, 2022
A&B IRRIGATION DISTRICT, BURLEY )
IRRIGATION DISTRICT, MILNER ) Melanie Gagnepain, Clerk
IRRIGATION DISTRICT, AMERICAN )
FALLS RESERVOIR DISTRICT #2, )
MINIDOKA IRRIGATION DISTRICT, )
NORTH SIDE CANAL COMPANY and )
TWIN FALLS CANAL COMPANY, )
)
Intervenors-Respondents. )
__________________________________ )
IN THE MATTER OF APPLICATION FOR )
TRANSFER NO. 83160 IN THE NAME OF )
JEFFREY AND CHANA DUFFIN. )
_______________________________________ )
Appeal from the District Court of the Seventh Judicial District of the State of Idaho,
Bingham County. Eric J. Wildman, District Judge.
The judgment of the district court is affirmed.
Holden Kidwell Hahn & Crapo, P.L.L.C. Idaho Falls, for Appellants. Robert L. Harris
argued.
Lawrence G. Wasden, Idaho Attorney General, Boise, for Respondent Idaho Department
of Water Resources. Michael C. Orr argued, and Garrick L. Baxter appeared.
Baker Rosholt & Simpson, LLP, Twin Falls, for Intervenors A&B Irrigation District,
Burley Irrigation District, Milner Irrigation District, North Side Canal Company, and Twin
Falls Canal Company.
Fletcher Law Office, Burley, for Intervenors American Falls Reservoir District #2 and
Minidoka Irrigation District. William Kent Fletcher argued.
_____________________
STEGNER, Justice.
This appeal concerns the denial of an application to transfer a ground water right that
currently benefits 53.9 acres which also has an entitlement to surface water rights. The transfer
application sought to unstack these two overlapping rights by transferring the ground water right
to irrigate a different property, which would double the number of acres being irrigated. The Idaho
Department of Water Resources (“IDWR”) denied the transfer because, among other reasons,
approving it would cause an “enlargement” in the use of water as proscribed by Idaho Code section
42-222(1). On judicial review, the district court agreed with the denial and affirmed. We affirm
the decision of the district court.
I. FACTUAL AND PROCEDURAL BACKGROUND
This appeal centers around IDWR’s denial of Application 83160, brought by Jeffrey and
Chana Duffin (“Duffin”), to transfer the licensed ground water right 35-7667 (the “ground water
right” or “35-7667”) to a different parcel of land. During the appeal of this case, 3G AG LLC (“the
LLC”) “purchased from Duffin the property where water right 35-7667—the water right subject
to Transfer No. 8316 which is the subject of this appeal—is located.” As a result of the transfer of
ownership, the LLC sought to substitute itself for Duffin. Because there was no objection to the
substitution, it was allowed. 1 The material facts leading up to the denial are undisputed.
In 1977, IDWR granted a ground water permit for 35-7667 to irrigate the existing place of
use in this appeal (i.e., the 53.9 acres). The application for the permit reported that there were no
other water “rights” used for the “same purposes” at this place of use. IDWR’s analysis of the
application reached the same conclusion. The then owner of the 53.9 acres eventually submitted
proof of beneficial use for the ground water permit on June 11, 1992. That date became the priority
1
Pursuant to our authority under Idaho Appellate Rule 6 to amend the caption of an appeal, we have amended the
caption in this case to reflect the substitution of Duffin by the LLC.
2
date, and four years later, IDWR examined whether the permit for 35-7667 should be processed
into a licensed ground water right. During this time, IDWR’s field exam notes explained that the
same place of use for 35-7667 (the 53.9 acres) was also benefited by a surface water entitlement
through 60 shares in the Aberdeen-Springfield Canal Company (the “surface water entitlement”).
Nevertheless, IDWR’s field report later documented that there were no overlapping water “rights”
benefiting the 53.9 acres.
In 1993, IDWR ordered a moratorium on processing applications for new surface or ground
water diversions in the Eastern Snake River Basin—the same area where the 53.9 acres is located.
The moratorium, which is still in effect today, explains that
[g]round water aquifers have become stressed by the reduction in natural recharge
due to changes in diversion and use of surface waters throughout the basin and by
the increased volume of pumping occurring to augment scarce surface water
supplies during the drought period. The lowered water levels in the aquifers across
much of the Snake River Basin in southern Idaho have resulted in numerous wells,
often those used for domestic and municipal water supply purposes becoming
unusable. Lowered ground water levels also reduce spring and base flow discharge
needed to maintain stream and river flows.
In 2001, IDWR granted a license for the ground water right. The license stated, among
other things, that it had a maximum diversion rate of 1.1 cubic feet per second; it had a maximum
diversion volume of 220-acre feet; the source was ground water; and the beneficial use was
irrigation. The license also contained a condition that “[t]his right when combined with all other
rights shall provide no more than 0.02 [cubic-feet per second] per acre nor more than 4.0 [acre-
feet annually] per acre at the field headgate for irrigation of the lands above.”
Seven years later, in 2008, the Idaho Legislature adopted IDWR’s comprehensive
management plan for the Eastern Snake Plain Aquifer (“the ESPA”). This plan was prepared by
IDWR in response to “declining aquifer levels and spring discharges and changing Snake River
flows that resulted in insufficient water supplies to satisfy existing beneficial uses.” One objective
of the plan is to “reduce the withdrawals” from the ESPA. Another objective is to “increase
recharge” to the ESPA. Most of the recharge water comes through the Snake River, or its
tributaries. This includes surface water recharge through the Aberdeen-Springfield Canal
Company’s water entitlements. In sum, the plan governs roughly 2.1 million irrigated acres on top
of the ESPA. Of these acres, approximately 871,000 acres are irrigated from surface water,
889,000 acres are irrigated from ground water, and 348,000 acres are irrigated from both sources.
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One year after implementing the plan, IDWR issued a guidance document for processing
water right transfers under Idaho Code section 42-222(1) (the “Transfer Memo”). The Transfer
Memo explains that a transfer application, under section 42-222(1), is required whenever a water
right holder desires to change one, or multiple, water right “elements” on a licensed or decreed
right. This includes changes to the point of diversion or place of use. The Transfer Memo goes on
to explain the requirements for an acceptable transfer application. It also elaborates upon what may
constitute “enlargement” in use of a water right. Part of its guidance as to whether approving a
transfer will enlarge the use of a water right addresses “stacked” or overlapping water rights
benefiting the same place of use.
In 2012, Duffin acquired ownership of the property to which the ground water right and
surface water entitlement attached. Three years later, in 2015, IDWR approved Duffin’s
application to divide the ground water right so that the place of use was identified as the 53.9 acres
that the right presently benefits. The license was amended to reflect this change, but otherwise
remained the same. Five years after that, in 2017, Duffin ceased using the ground water right to
irrigate the 53.9 acres and instead began exclusively using the surface water entitlement.
Two years later, in 2019, Duffin submitted Transfer Application 83160 to change the point
of diversion and place of use for the ground water right to benefit a different property. In the
application, Duffin reported that the existing place of use (the 53.9 acres) would still be irrigated
with the surface water entitlement if the transfer were approved. The local watermaster did not
oppose the proposed transfer. However, a notice of protest to the transfer was filed by A&B
Irrigation District, Burley Irrigation District, Milner Irrigation District, American Falls Reservoir
District #2, Minidoka Irrigation District, North Side Canal Company, and Twin Falls Canal
Company (collectively “the Coalition”). The Coalition objected to the transfer, arguing that
approving it would cause an enlargement in use of the ground water right and injure existing water
rights.
After numerous status conferences, Duffin and the Coalition agreed that an evidentiary
hearing was not needed because the material facts were not in dispute. Subsequently, the parties
filed a statement of stipulated facts. From this, the hearing officer requested briefing on how to
resolve the sole legal question: whether Duffin’s application satisfied the transfer criteria set forth
in Idaho Code section 42-222(1) such that the transfer must be approved. After the parties
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submitted their briefing, the hearing officer issued a preliminary order denying Duffin’s
application to transfer the ground water right.
Duffin petitioned for reconsideration. The hearing officer granted the petition in part and
issued an amended preliminary order. However, this order still denied Duffin’s transfer
application. In August of 2020, the amended preliminary order became final after it was adopted
in whole by the director of IDWR (the “Final Order”). The Final Order made the following
findings, among others, based on the stipulated facts: the ground water right has been exclusively
used to irrigate the existing place of use (the 53.9 acres) since at least April 1, 1980; the same place
of use is also benefited by a surface water entitlement that has been appurtenant to it since at least
1970; the two rights have never been used together in the same year to irrigate the existing place
of use; the ground water right has been used to irrigate the existing place of use up to 2017; and
from 2017 to the present day, the surface water entitlement has been used to irrigate the place of
existing use.
The Final Order applied these facts to this Court’s discussion of the term “enlargement” in
Barron v. Idaho Department of Water Resources, 135 Idaho 414, 18 P.3d 219 (2001). Barron dealt
with a transfer application proposing to unstack overlapping ground and surface water rights. As
discussed below, the Final Order reasoned that, under Barron, approving the transfer would cause
an enlargement in use of the ground water right and injury to other water rights. In addition,
approval was not consistent with the conservation of water resources in Idaho or the local public
interest. From this, the Final Order concluded that the transfer must be denied because the criteria
in Idaho Code section 42-222(1) had not been met.
Roughly one month later, in September 2020, Duffin petitioned the district court for
judicial review of the Final Order. Pursuant to a December 9, 2009, administrative order from this
Court, the matter was assigned to the district judge presiding over the Snake River Basin
Adjudication. The district court permitted the Coalition to intervene in Duffin’s petition, and in
February of 2021, the court held oral argument. Approximately two weeks later, the district court
issued a memorandum decision affirming the Final Order and IDWR’s decision to deny Duffin’s
transfer application. The district court, among other things, agreed with the Final Order’s reliance
on Barron as dispositive and found that approval of the transfer would cause an “enlargement” in
use of the ground water right and injury to other water rights. Thus, the district court concluded
5
that Duffin’s application for transfer under Idaho Code section 42-222(1) was appropriately denied
by IDWR.
Duffin timely filed a notice of appeal.
II. STANDARD OF REVIEW
Judicial review of a final decision or order from the director of IDWR is authorized by
Idaho Code section 42-1701A(4) and governed by the provisions and standards under the Idaho
Administrative Procedure Act (“IDAPA”). See I.C. §§ 67-5201 to -5292.
In an appeal from the decision of a district court acting in its appellate capacity under
IDAPA, we review the agency record independently of the district court’s decision. A & B Irr.
Dist. v. Idaho Dep’t of Water Res., 153 Idaho 500, 505, 284 P.3d 225, 230 (2012). We will not
“substitute [our] judgment for that of the agency as to the weight of the evidence on questions of
fact.” I.C. § 67-5279(1). However, we exercise de novo review over questions of law. In Re SRBA
Case No. 39576 Sucbase No. 37-00864, 164 Idaho 241, 248, 429 P.3d 129, 136 (2018).
When an agency is required by the provisions of IDAPA, or by other provisions of law, to
issue an order, a reviewing court shall affirm the agency action unless the court 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).
If the reviewing court does not affirm the agency action, “it shall be set aside, in whole or
in part, and remanded for further proceedings as necessary.” Id. However, even if one of the
conditions in section 67-5279(3)(a)-(e) is met, a reviewing court should still affirm the agency
action “unless substantial rights of the appellant have been prejudiced.” A & B Irr. Dist., 153 Idaho
at 505–06, 284 P.3d at 230–31 (quoting I.C. § 67-5279(4)).
III. ANALYSIS
This appeal hinges on the interpretation of “enlargement” under Idaho Code section 42-
222(1) as it relates to a transfer application proposing to unstack overlapping ground and surface
water rights. The LLC, which substituted for Duffin, maintains that IDWR’s decision to deny the
transfer application violates applicable statutory provisions and is in excess of its statutory
6
authority. See I.C. § 67-5279(3)(a), (b). All material facts are undisputed. Accordingly, the LLC’s
challenge to the denial of its transfer application presents a pure question of law.
A. Approving the transfer application would cause an “enlargement in use” of the
ground water right under Idaho Code section 42-222(1) and Barron v. Idaho
Department of Water Resources, 135 Idaho 414, 18 P.3d 219 (2001).
Idaho Code section 42-222(1) sets forth the criteria used by IDWR to evaluate applications
to transfer water rights whenever a right holder desires to change a water right’s “point of
diversion, place of use, period of use[,] or nature of use[.]” IDWR must furnish the form required
to complete a transfer application. I.C. § 42-222(1). When evaluating an application, the statute
instructs IDWR to, among other things, examine “all the evidence and available information” and
to approve the application unless approval would: (1) injure other water rights; (2) constitute an
“enlargement in use of the original right”; (3) be contrary to the conservation of water resources
within the state of Idaho; or (4) be contrary to the “local public interest[.]” Id.; see also I.C. § 42-
202B(3) (defining “local public interest”). IDWR may consider “consumptive use” as one factor
in its “enlargement” evaluation. I.C. § 42-222(1); see also I.C. § 42-202B(1) (defining
“consumptive use”).
In this case, IDWR, in its Final Order, denied the application to transfer the ground water
right after concluding approval of the transfer would: (1) constitute an enlargement in use of the
ground water right; (2) injure other water rights in either the Upper Snake River system or the
ESPA; (3) be contrary to the conservation of water resources in the state of Idaho; and (4) be
contrary to the local public interest as the proposed point of diversion is within the 1993
moratorium aimed at recharging the ESPA and concomitantly reducing withdrawals. The linchpin
of IDWR’s decision is that approval of the transfer would constitute an “enlargement” under this
Court’s enlargement and unstacking analysis in Barron v. Idaho Department of Water Resources,
135 Idaho 414, 18 P.3d 219 (2001).
On appeal, the LLC rejects the theory of enlargement in Barron as dicta and advances its
own theory of what an “enlargement” analysis should look like under Idaho Code section 42-
222(1). Under the LLC’s theory, the plain language of section 42-222(1) limits IDWR to
examining the four corners of the license or decree of the water right to be transferred (the “original
right”) when determining whether approving the transfer will cause a prohibited enlargement. The
LLC maintains that IDWR erred by examining all relevant water rights or entitlements implicated
7
by the transfer, and imputing limitations or conditions on the right to be transferred that do not
appear on the face of its license.
The LLC points out that the license for the ground water right does not contain any express
limitations on its beneficial use apart from a limitation memorializing the “duty of water” under
Idaho Code section 42-220. From this, the LLC maintains that IDWR improperly added a “single
combined beneficial use” limit to the ground water right, in its relationship to the surface water
entitlement, that does not exist within the four-corners of the ground water right’s license. If this
“error” is corrected, the LLC argues that unstacking the ground water right and transferring it to a
new parcel will not cause an “enlargement” under section 42-222(1). This is because the ground
water right, without any limitations on its face to combine it with the surface water entitlement, is
a stand-alone right that can be freely transferred.
In other words, the LLC maintains that whether the ground and surface water rights are in
fact stacked and benefit the same 53.9 acres is not relevant to the “enlargement” analysis under
section 42-222(1) because the license for the ground water right does not provide that this overlap
limits the ground water right in any way. The LLC claims that holding otherwise would collaterally
add limits to a previously licensed water right. In addition, the LLC points to the Transfer Memo
as supporting its theory of enlargement and argues the Transfer Memo was improperly denied
“considerable weight” as an agency interpretation of Idaho Code section 41-222(1).
In response, IDWR and the Coalition advance essentially the same position they did below:
that Barron provides the correct “enlargement” analysis in this context, and that it was properly
applied. For the reasons discussed below, we reject the LLC’s new theory of enlargement as
contrary to the plain language of Idaho Code section 42-222(1) and our decision in Barron.
Accordingly, we affirm the district court’s decision that the Final Order correctly denied the
proposed transfer.
To begin, the meaning of “enlargement” under Idaho Code section 42-222(1) is not defined
by statute or rule. See I.C. §§ 42-201 to -250; IDAPA 37.01.01.000–.999. In Fremont-Madison
Irrigation District & Mitigation Group v. Idaho Ground Water Appropriators, Inc., we defined
“enlargement” in the context of water right transfers under Idaho Code section 42-1425(2). 129
Idaho 454, 458, 926 P.2d 1301, 1305 (1996). “Section 42-1425(2) of the Idaho Code provides for
a transfer of an existing water right for any change made prior to the date of commencement of the
[Snake River Basin Adjudication], regardless of compliance with sections 42-108 and 42-222,
8
‘provided no other water rights existing on the date of the change were injured and the change did
not result in an enlargement of the original right.’ ” Id.In Fremont-Madison, we noted that section 42-1425(2) did not define the term
“enlargement.” Id. Nevertheless, we said “enlargement” is understood “to refer to any increase in
the beneficial use to which an existing water right has been applied, through water conservation
and other means.” Id. (citing I.C. § 42-1426(1)(a)). An “enlargement” can also include an “increase
in the volume of water diverted” as a result of the transfer. Fremont-Madison Irr. Dist. &
Mitigation Grp., 129 Idaho at 458, 926 P.2d at 1305. Thus, there are two types of enlargement: (1)
“an increase in the number of acres irrigated”; and (2) “an increase in the rate of diversion or
duration of diversion.” Id. Although Fremont-Madison dealt with “enlargement” in the context of
transferring water rights under section 42-1425(2) and not section 42-222(1), there is no language
in either statute that suggests the Idaho Legislature intended “enlargement” to mean something
different as between these two transfer statutes.
In Barron, we specifically addressed both types of “enlargement” in the context of a
transfer under section 42-222(1). 135 Idaho at 419–20, 18 P.3d at 224–25. In that case, Barron
proposed to transfer a surface water right by unstacking it from an overlapping ground water right
at the existing place of use, and then establishing two new points of diversion—one fifteen miles
upstream and the other eighty miles downstream. Id. at 415, 18 P.3d at 220. At the place of existing
use, the surface water right overlapped with, and benefited, the same 311 acres as the ground water
right. Id. The two “enlargement” issues in Barron were whether: (1) the transfer would cause an
increase in the rate or duration of diversion at the two proposed points of diversion; and (2) whether
unstacking the overlapping surface and ground water rights would cause an increase in the total
number of acres irrigated, i.e., an increase in overall beneficial use. Id. at 419–420, 18 P.3d at 224–
25. Under the first issue, we affirmed the decisions below that Barron failed to provide any
meaningful evidence regarding the period of use, amount of water to be diverted or consumed, or
whether and to what extend the ground water right was used to supplement the surface water right.
Id. at 419, 18 P.3d at 224. Thus, one reason for the denial was because Barron did not carry his
burden to show that approving the transfer would not cause an increase in the rate of, or duration
of, overall diversion. Id.Under the second issue, which is relevant to this case, we also affirmed the decisions below
that, as a matter of law, unstacking the overlapping water rights would cause an “enlargement” if
9
the result is that the two rights would irrigate more acres than are benefited at the existing place of
use. Id. at 420, 18 P.3d at 225. Barron did not challenge this theory of “enlargement” under Idaho
Code section 42-222(1). See id. Instead, Barron contended that he provided sufficient evidence
that the surface water right was a “stand alone” right and that the existing place of use, the 311
acres, would be “farmed as dry land” to prevent any enlargement once the surface water right was
transferred to the proposed place of use. Id. However, we rejected this argument because Barron
did not own or exercise control over the existing place of use he claimed would be relegated to dry
farming after the transfer. Id. Barron’s proposal was “in reality an attempt to shift the burden of
preventing enlargement to [] IDWR, yet it is Barron and not [IDWR] who bears this burden.” Id.Due to the relationship of the stacked rights, Barron held that the surface water right was
subject to the overlapping ground water right’s “utilization.” Id. We concluded Barron did not
provide sufficient evidence to show unstacking these rights would not cause an enlargement
through an increase in total acres irrigated. Id. From this, we affirmed the denial of Barron’s
transfer application after reaching the merits of both enlargement issues under Idaho Code section
42-222(1). Id. Accordingly, IDWR and district court were correct to conclude Barron provides
precedent for a transfer application seeking to unstack overlapping water rights. Contrary to the
LLC’s arguments, Barron’s theory of enlargement under section 42-222(1) in the context of
unstacking is not dicta. Even if it were, we conclude that it is a correct statement of law.
In applying Barron to the transfer application in this case, the Final Order concluded that
the proposed change to the ground water right would result in “an increase in the number of acres
irrigated, which is an enlargement” because the ground water right and surface water right would
provide irrigation for 107.8 acres, which would double the number of acres currently being
irrigated with the “stacked” rights:
The proposed change to water right 35-7667 [ground water right] will result in an
increase in the number of acres irrigated, which is an enlargement, as noted above.
Currently, water right 35-7667 [ground water right] and the ASCC shares [surface
water entitlement] authorize the irrigation of the same 53.9 acres. These two water
rights, in combination, represent a single beneficial use of water at the existing
place of use—the irrigation of 53.9 acres. If these two rights were separated or
unstacked, the beneficial use associated with the water rights would double,
because the acres being irrigated under the water rights would double. Water right
35-7667 [ground water right] and the ASCC shares [surface water entitlement]
represent a single beneficial use of water (the irrigation of 53.9 acres) regardless of
whether the acres have been irrigated with ground water, surface water, or both in
the same irrigation season. The changes proposed in Application 83160 would
10
result in an enlargement of water right 35-7667 [ground water right] and must be
denied pursuant to Idaho Code § 42-222(1).
(Italics added.)
The Final Order also concluded that the dispute over whether the ground water right should
be considered a “primary” or “supplemental” water right (i.e., secondary to the surface water right)
does not need to be resolved because the “enlargement analysis would be identical in either case.”
This is because the ground water right and the surface water right “each represented a full water
supply for the irrigation of the existing 53.9-acre place of use, but the total combined beneficial
use for the two sources has always been no more than 53.9 irrigated acres.” If the transfer
application is approved, the LLC would be authorized to exercise its “water rights in a way that
will result in 107.8 acres being irrigated for the full irrigation season, instead of the 53.9 acres
which are currently irrigated under the rights.” Because the transfer application did not propose to
divide the existing beneficial use between the ground water right and surface water entitlement,
IDWR concluded “there is no need for an analysis of the historical primary or supplemental use
under the rights.”
On judicial review, the district court agreed, reiterating IDWR’s position that approving
the transfer would necessarily result in doubling the existing beneficial use as authorized between
the stacked rights:
Simply stated, the transfer would permit the Duffins to do what they cannot do
now—use the full water supply under each overlapping water right at the same time
for purposes of irrigation. The ability to use the full amount authorized under the
ground water right for irrigation even if they are also irrigating the original place of
use with their ASCC shares is an enlargement of the ground water right. Without
the transfer, the Duffins would be precluded from using the ground water right in
this fashion due to (1) the duty of water limit, and (2) the right’s conditional remark.
With the transfer, these limitations are removed, with the result that each right may
be used simultaneously to irrigate 107.8 total acres as opposed to 53.9. Irrigating
additional acres in this fashion would necessarily result in an increase in
consumptive use and reduce return flows to the system. Therefore, the [c]ourt finds
[IDWR] correctly concluded the proposed transfer would result in an enlargement
in use of the ground water right. It follows the [Final Order] must be affirmed.
(Italics in original.)
We agree with the analysis and conclusion of the district court. The Barron theory of
enlargement under section 42-222(1) controls and the district court correctly applied Barron in
denying the transfer application. In this case, approving the transfer application would permit
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concurrent use of the ground water right with the surface water right, allowing irrigation of 53.9
acres at two separate locations. Currently, the two rights may only irrigate 53.9 acres at one
location. After transfer, the rights would double the number of irrigated acres. Accordingly, there
would be an increase in total irrigated acres if the transfer were approved. This would result in an
“enlargement” under Idaho Code section 42-222(1) and Barron. Thus, the transfer application was
appropriately denied. The LLC’s arguments to the contrary are unpersuasive.
1. The plain language of Idaho Code section 42-222(1) requires IDWR to examine the
relationship between stacked water rights before authorizing a transfer.
The LLC’s new theory of enlargement is contrary to the plain language of Idaho Code
section 42-222(1). The plain language of section 42-222(1) requires IDWR to examine the
relationship between stacked water rights that provide beneficial use to the same place of existing
use when deciding whether transferring one of the stacked rights will result in an enlargement.
This Court exercises free review over statutory interpretation because it is a question of
law. State v. Dunlap, 155 Idaho 345, 361, 313 P.3d 1, 17 (2013). The standard for statutory
interpretation is well-settled:
The objective of statutory interpretation is to derive the intent of the legislative
body that adopted the act. Statutory interpretation begins with the literal language
of the statute. Provisions should not be read in isolation, but must be interpreted in
the context of the entire document. The statute should be considered as a whole,
and words should be given their plain, usual, and ordinary meanings. It should be
noted that the Court must give effect to all the words and provisions of the statute
so that none will be void, superfluous, or redundant. When the statutory language
is unambiguous, the clearly expressed intent of the legislative body must be given
effect, and the Court need not consider rules of statutory construction.
Melton v. Alt, 163 Idaho 158, 162–63, 408 P.3d 913, 917–18 (2018) (quoting Dunlap, 155 Idaho
at 361–62, 313 P.3d at 17–18).
Here, the LLC disputes Barron’s theory of “enlargement” by proposing a new
interpretation of Idaho Code section 42-222(1). The statute provides in relevant part:
Any person . . . . who shall desire to change the point of diversion, place of use,
period of use or nature of use of all or part of the water, under the right shall first
make application to the department of water resources for approval of such change
. . . . The director of the department of water resources shall examine all the
evidence and available information and shall approve the change in whole, or in
part, or upon conditions, provided [1] no other water rights are injured thereby, [2]
the change does not constitute an enlargement in use of the original right, [3] the
change is consistent with the conservation of water resources within the state of
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Idaho and [4] is in the local public interest as defined in section 42-202B . . . .
The director may consider consumptive use, as defined in section 42-202B, Idaho
Code, as a factor in determining whether a proposed change would constitute an
enlargement in use of the original water right.
I.C. § 42-222(1) (italics added).
The LLC’s interpretation suggests the statute’s “original right” language limits IDWR’s
examination to only the language within the four corners of the license to be transferred when
determining if approving a transfer will cause an enlargement. On the other hand, IDWR and the
Coalition argue the LLC’s interpretation fails to give effect to all the words in the statute and is
contrary to the plain language of the statute. We agree with IDWR and the Coalition.
The transfer statute begins with an overarching requirement that IDWR “shall” examine or
consider “all the evidence and available information” relevant to a transfer application. I.C. § 42-
222(1). Indeed, IDWR is tasked with providing the transfer form that requests such relevant
evidence and information from an applicant. See id. We cannot read the “original right” language
in isolation as the LLC suggests. See Melton, 163 Idaho at 162–63, 408 P.3d at 917–18. Read as a
whole, section 42-222(1) requires IDWR to consider whether transferring the “original right” will
cause an enlargement “in use” of that right when considering “all the evidence and available
information[.]” I.C. § 42-222(1) (italics added). This broad mandate is supported by Idaho’s
longstanding principle that individual water right holders cannot “waste” or “unnecessarily hoard”
water without putting it to beneficial use. Am. Falls Reservoir Dist. No. 2 v. Idaho Dep’t of Water
Res., 143 Idaho 862, 880, 154 P.3d 433, 451 (2007). Consistent with Article XV, section 3, of the
Idaho Constitution, it is well-settled that
no person can, by virtue of a prior appropriation, claim or hold more water than is
necessary for the purpose of the appropriation, and the amount of water necessary
for the purpose of irrigation of the lands in question and the condition of the land
to be irrigated should be taken into consideration.
Wash. State Sugar Co. v. Goodrich, 27 Idaho 26, 44, 147 P. 1073, 1079 (1915); see also IDAHO
CONST. art. XV, § 3.
Moreover, “all ground water pumpers impact all hydraulically connected surface water
users in the same aquifer and [] all users of hydraulically connected surface water are hydraulically
impacted by all ground water users.” Gary S. Johnson, Hydrologic Complications of Conjunctive
Management, 47 IDAHO L. REV. 205, 215 (2011). Thus, in examining “all the evidence” in a
transfer application, IDWR must stay mindful of its duty to conjunctively manage the waters of
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the Upper Snake River system and the ESPA. See Clear Springs Foods, Inc. v. Spackman, 150
Idaho 790, 796, 252 P.3d 71, 77 (2011). Indeed, “[c]onjunctive management of ground water and
surface water rights is one of the main reasons for the commencement of the Snake River Basin
Adjudication.” A & B Irr. Dist. v. Idaho Conservation League, 131 Idaho 411, 422, 958 P.2d 568,
579 (1997).
From this, it follows that examining the relationship, if any, between the right to be
transferred and any overlapping or stacked water rights is crucial to determining whether
enlargement in consumptive use would occur as a result of a transfer (e.g., increase in total acres
irrigated than before the transfer). This necessarily requires IDWR, consistent with Barron, to
examine the relationship of the right to be transferred with other stacked rights before approving
or denying a transfer application under Idaho Code section 42-222(1). The LLC’s argument would
tie IDWR’s hands and prohibit the analysis that section 42-222(1) requires.
2. IDWR’s transfer evaluation under Idaho Code section 42-222(1) did not collaterally
attack the previously licensed ground water right.
The LLC next argues that allowing IDWR to read in new limits or conditions on a
previously licensed water right during a transfer evaluation is an impermissible collateral attack
on that licensed right. We disagree. In examining the interrelationship between the ground and
surface water rights, the Final Order does impose a “single combined beneficial use” limit to
describe the overlapping rights. However, this is not analogous to an impermissible collateral
attack on a previously adjudicated or licensed water right.
In American Falls Reservoir Dist. No. 2 v. Idaho Department of Water Resources, we
explained that imposing new conditions or limits when evaluating the relationship between water
rights at issue in a delivery call is not a collateral “re-adjudication” of the water rights themselves.
143 Idaho at 876–77, 154 P.3d at 447–48. Adjudicating a water right determines, among other
things, the water source, quantity, priority date, point of diversion, place, and period and purpose
of use. Id. (citing I.C. § 42-1411(2)(a)–(j)). Conversely, the question presented in a delivery call,
namely the “reasonableness” of a diversion in the administration of water rights, is not a re-
adjudication of these elements because the “reasonableness” limit or condition is not one of the
previously determined elements. Am. Falls Reservoir Dist. No. 2, 143 Idaho at 876–77, 154 P.3d
at 447–48. We explained that a partial decree “need not contain information on how each water
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right on a source physically interacts or affects other rights on that same source.” Id. (Italics
added.)
Here, the same reasoning applies. When IDWR imposes relationship-based conditions or
limits on water rights in denying a transfer application, this is not a collateral re-adjudication of
the water rights themselves. Like the unique question presented in a delivery call, the question
presented in an enlargement evaluation cannot always be easily answered by, and is not necessarily
part of, the elements of a water right as licensed or decreed. Thus, when IDWR reads in a “single
combined beneficial use” limit on overlapping or stacked water rights in denying a transfer
application—that is not a re-adjudication of the water right’s elements. Such a limit is not an
“element” of a water right as enumerated under Idaho Code section 42-1411(2)(a)–(j).
To be sure, sub-sections 42-1411(2)(i) and (j) indicate that “conditions” on the “exercise
of any water right” or “remarks and other matters as are necessary for the definition of the right”
should be included together with the water right elements listed in subsections (2)(a) through (h).
However, such “conditions” typically relate to those elements already expressed on the license or
decree. As in American Falls, a decree or license is not required to enumerate every possible
condition or limitation as to how that water right does or does not interact with other water rights
involving a subsequent transfer application. The LLC’s four-corners theory of enlargement would
essentially require IDWR to prophetically answer every question of enlargement on every license
or decree before it is issued.
In support of its “four corners” theory and collateral attack argument, the LLC relies
heavily on our decision in City of Blackfoot v. Spackman, 162 Idaho 302, 396 P.3d 1184 (2017).
However, the LLC’s reliance is misplaced. In City of Blackfoot, the city applied to appropriate a
new diversion of groundwater. Id. at 304, 396 P.3d at 1186. To offset injury to other water rights
holders resulting from a new appropriation, the city proposed to use mitigation credit resulting
from seepage under its surface water right. Id. at 305, 396 P.3d at 1187. However, IDWR
determined, and we agreed, that the city’s decreed surface water right could not be used for
mitigation credit because the decree did not list “recharge” as one of the right’s purposes of use.
Id. at 307, 396 P.3d at 1189. “[P]urpose of use” is a water right element listed under Idaho Code
section 42-1411(2)(f) that must appear on the face of a decreed water right. Id. at 306–07, 396 P.3d
at 1188–89. Changing this element, for example by adding a new purpose of use, requires a transfer
application under Idaho Code section 42-222(1). Id. at 308, 396 P.3d at 1190. Accordingly, in City
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of Blackfoot, we held that if the city wanted to use its surface water right for “recharge” in support
of its appropriation application, the city had to first apply to change the right’s purpose of use
under section 42-222(1). Id. The city’s attempt to add a new purpose of use element without this
application, and without an appeal from the right at the time it was decreed, was an impermissible
collateral attack on a conclusively decreed water right. Id.
In this case, as explained above, the “single combined beneficial use” limit imposed on
stacked surface and ground water rights is not adding an “element” to the licensed ground water
right. The limit is neither an element, nor a condition on an element under Idaho Code section 42-
1411(2). Instead, the limit is the byproduct of evaluating the relationship between the overlapping
ground and surface water rights during the transfer request process—a question that a four-corners
analysis of one license or decree necessarily cannot answer. Accordingly, our holding in City of
Blackfoot does not apply under these facts.
3. Contrary to the LLC’s argument, the Transfer Memo is consistent with our
interpretation of enlargement set out in Barron and supports the denial of the LLC’s
transfer application.
Finally, the LLC argues that the Transfer Memo was not given “considerable weight” as
an agency interpretation of section 42-222(1). IDWR responds that the LLC’s argument is
foundationally flawed because the Transfer Memo is consistent with the theory of enlargement
under Barron. Therefore, whether the Transfer Memo was not given “considerable weight” is
immaterial because it does not support the LLC’s “four-corners” theory of enlargement.
An agency interpretation may be afforded a particular level of deference based on our
jurisprudence. See Duncan v. State Bd. of Acct., 149 Idaho 1, 3, 232 P.3d 322, 324 (2010); Preston
v. Idaho State Tax Comm’n, 131 Idaho 502, 504, 960 P.2d 185, 187 (1998); J.R. Simplot Co. v.
Idaho State Tax Comm’n, 120 Idaho 849, 862–63, 820 P.2d 1206, 1219–20 (1991). “Considerable
weight” is one level of deference. See J.R. Simplot Co., 120 Idaho at 862–63, 820 P.2d at 1219–
20. However, here, even if the Transfer Memo is granted considerable weight, such weight
militates in favor of denying the transfer application consistent with Barron.
The Transfer Memo contains an “Enlargement of Use” section providing guidance on how
to evaluate a transfer application that proposes to change the place of use for a water right that is
stacked with other water rights:
(3) Stacked Water Rights. Water rights are “stacked” when two or more water
rights, generally of different priorities and often from different sources, are used for
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the same use and overlie the same place of use. Water rights for irrigating a
permissible place of use are not necessarily stacked when the water rights in total
provide for irrigating up to the maximum acreage authorized within a permissible
place of use. An application for transfer proposing to “unstack” one or more water
rights used for irrigation or other use, without changing all the rights for the same
use, is presumed to enlarge the water right. However, the place of use for a
supplemental irrigation right may be changed for continued use as a supplemental
irrigation right at a different place of use without, by definition, enlarging the
original right or the supplemental right proposed for transfer, so long as the primary
rights at the original and proposed places of use provide comparable water supplies.
In other words, use of the supplemental right at the proposed place of use cannot
materially exceed use of the supplemental right at the current place of use.
(Italics added.)
The Transfer Memo’s presumption that unstacking overlapping water rights will result in
an enlargement under section 42-222(1) is consistent with the enlargement theory we set out in
Barron. Here, it is undisputed that the transfer application will result in a doubling in the number
of irrigated acres. Consequently, like the analysis in Barron, and set out in the Transfer Memo,
approving the transfer would result in an enlargement. The other sections in the Transfer Memo
that the LLC points to do nothing to change this result or analysis. Accordingly, we agree with
IDWR that whether the Transfer Memo was given “considerable weight” is immaterial because it
does not support the LLC’s “four-corners” theory of enlargement.
B. Approving the transfer application would cause injury to other water rights holders.
After the enlargement issue, the district court only reached, and affirmed, the conclusions
in the Final Order that (1) the proposed transfer would result in injury to other water rights holders;
and (2) denying the transfer would not prejudice Duffin’s substantial rights. (Duffin was still the
real party in interest when the district court affirmed the Final Order.) We affirm.
First, “there is a per se injury to junior water rights holders anytime an enlargement receives
priority.” A&B Irrigation Dist. v. Aberdeen–American Falls Ground Water Dist., 141 Idaho 746,
753, 118 P.3d 78, 85 (2005). “Priority in time is an essential part of western water law and to
diminish one’s priority works an undeniable injury to that water right holder.” City of Pocatello v.
Idaho, 152 Idaho 830, 835, 275 P.3d 845, 850 (2012) (quoting Jenkins v. Idaho Dep’t of Water
Res., 103 Idaho 384, 388, 647 P.2d 1256, 1260 (1982)). Here, as explained above, transferring the
ground water right would cause an enlargement. Thus, the district court correctly affirmed the
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conclusion in the Final Order that approving the transfer application would per se injure other
existing water rights.
Second, to prevail on judicial review of an agency action, a party must establish that the
agency erred for one of the reasons provided under Idaho Code section 67-5279(3), and that such
error(s) resulted in at least one of the complaining party’s “substantial rights” being prejudiced.
See I.C. § 67-5279(4). The use of “and” in the statute means that this test is conjunctive. See
Hungate v. Bonner Cnty., 166 Idaho 388, 393–94, 458 P.3d 966, 971–72 (2020). Here, the LLC
did not show IDWR acted in violation of any statutory provisions or in excess of its statutory
authority under Idaho Code section 67-5279(3). The LLC failed to show the transfer would not
result in an enlargement or injury to other water rights, and IDWR was within its statutory authority
to deny the LLC’s application under Idaho Code section 42-222(1). Accordingly, we need not
reach whether the denial prejudices the LLC’s substantial rights. See Rangen, Inc. v. Idaho Dep’t
of Water Res., 159 Idaho 798, 812, 367 P.3d 193, 207 (2016) (affirming the district court’s decision
that IDWR did not err under section 67-5279(3) without ever reaching whether Rangen’s
substantial rights were prejudiced).
C. IDWR and the Coalition are entitled to costs as prevailing parties on appeal, but not
their attorney fees.
Both IDWR and the Coalition request attorney fees as the prevailing parties on appeal
under Idaho Code section 12-117(1). The Coalition also requests attorney fees under Idaho Code
section 12-121. For the reasons set forth below, we grant IDWR and the Coalition their costs, but
we deny them attorney fees on appeal.
Section 12-117(1) provides in relevant part:
Unless otherwise provided by statute, in any proceeding involving as
adverse parties a state agency . . . and a person, . . . the court hearing the proceeding,
including on appeal, shall award the prevailing party reasonable attorney’s fees . . .
if it finds that the nonprevailing party acted without a reasonable basis in fact or
law.
I.C. § 12-117(1).
IDWR argues it is entitled to fees under section 12-117(1) because the LLC has not raised
an issue of first impression; has not made a facially plausible legal argument; and has no reasonable
basis to doubt Barron’s interpretation of “enlargement” under Idaho Code section 42-222(1). The
Coalition, relying on Rangen, Inc. v. Idaho Department of Water Resources, 159 Idaho 798, 367
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P.3d 193 (2016), maintains that attorney fees are appropriate because the LLC has “advanced
ostensibly the same, failed arguments at every turn.” The LLC responds that fees are not
appropriate because they have presented a “legitimate question for this Court to address.” In
particular, the LLC points out that this is the first time IDWR has been challenged on its practice
of imputing a “single combined beneficial use” limit against stacked water rights during a transfer
evaluation—an issue that is not dictated by statute or explained by rule.
In Rangen, this Court set out a standard for granting fees to the prevailing party under Idaho
Code section 12-117(1). 159 Idaho at 812, 367 P.3d at 207. Quoting our decision in Castringo v.
McQuade, 141 Idaho 93, 98, 106 P.3d 419, 424 (2005), Rangen explained that fees are appropriate
when the nonprevailing party “continued to rely on the same arguments used in front of the district
court, without providing any additional persuasive law or bringing into doubt the existing law on
which the district court based its decision.” 159 Idaho at 812, 367 P.3d at 207. Applying this
standard, and without examining whether the substance of Rangen’s arguments were unreasonable,
we awarded fees because Rangen “asserted substantially the same arguments on appeal as it did
before the district court on judicial review and failed to add significant new analysis or authority
to support its argument.” Id. In other words, repeating the same arguments on appeal, regardless
of their basis in law or fact, was enough to conclude Rangen was acting without any “reasonable
basis in fact or law.” Id. We now distinguish the Rangen standard because it is inconsistent with
the plain language set out in Idaho Code section 12-117(1).
Section 12-117(1) permits an award of fees only if the nonprevailing party “acted without
a reasonable basis in fact or law.” Determining whether the nonprevailing party had a “reasonable”
argument in law requires, at a minimum, examining the legal arguments made, i.e., the substance
of the nonprevailing party’s arguments. When it comes to questions of law, like the one presented
in this case, an argument is not “unreasonable” under section 12-117(1) simply because it was
repeated on appeal after being rejected by the agency and district court below. Moreover, even if
the nonprevailing party does not provide new authority in support of its repeated legal argument—
this has no connection to whether the argument has a “reasonable” basis in law.
Holding otherwise, and continuing the Rangen standard, places a higher burden on litigants
seeking to challenge questions of law—which this Court reviews de novo—than the language of
section 12-117(1) supports. The Rangen standard incorrectly renders every nonprevailing legal
argument per se unreasonable, regardless of its merits, if it is repeated from the agency level
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through to this Court. Moreover, the Rangen standard discourages litigants from challenging
conclusions of law made by agencies because doing so would require litigants to repeat the same
legal argument until they receive a final answer from this Court. Discouraging litigants from
challenging the legal conclusions of an executive agency necessarily stunts our power to effectuate
de novo review and determine what the law is with finality. See Marbury v. Madison, 5 U.S. 137,
177 (1803) (“It is emphatically the province and duty of the judicial department to say what the
law is.”); see also Mead v. Arnell, 117 Idaho 660, 669, 791 P.2d 410, 419 (1990) (“The
Constitution gives both the power and a clear directive to this Court to interpret the law and to
determine what administrative rules ‘do or do not conflict with statutory law.’ ”).
The reason for awarding attorney fees under section 12-117(1) in Castringo, on which
Rangen relies, was that the nonprevailing party failed to follow well-defined “statutory
procedures” for appealing separate appraisals. See 141 Idaho at 98, 106 P.3d at 424. Although we
noted in Castringo that the nonprevailing party repeated the same arguments on appeal as made
below, this merely buttressed our decision to award fees. Instead, our decision focused on the
substance of the nonprevailing arguments to conclude they had no “reasonable basis” in law
because statutory procedure clearly dictated the result of the case and supported the district court’s
decision. See id. We return to the standard used in Castringo as consistent with the preconditions
for awarding fees under section 12-117(1). The reasonableness of a challenge to an agency’s
conclusions of law, when considering fees under section 12-117(1), turns on the substance of the
nonprevailing party’s legal arguments—not on whether the arguments were merely repeated or
repackaged from below.
In this case, there is no definition of “enlargement” by statute or administrative rule.
Moreover, IDWR has not promulgated any rules setting out how it will deal with transfer
applications under Idaho Code section 42-222(1) that seek to unstack overlapping water rights.
IDWR has issued a Transfer Memo describing a presumption of “enlargement” when unstacking
water rights, but this is a non-binding interpretation of section 42-222(1). It does not have the
“force of law” on the issue of unstacking and enlargement like the procedure provided by statute
in Castringo. See Asarco Inc. v. State, 138 Idaho 719, 723, 69 P.3d 139, 143 (2003) (“[A]n agency
action characterized as a rule must be promulgated according to statutory directives for rulemaking
in order to have the force and effect of law.”). Although Barron provides the correct “enlargement”
analysis, the LLC is correct that IDWR’s action of imputing a “single combined beneficial use”
20
limit against a fully licensed water right—that does not expressly contain such a limit—has never
been specifically addressed by this Court. Although the LLC has not prevailed, it is reasonable to
argue that imposing such a limit during a transfer evaluation is an impermissible collateral attack
on a fully licensed water right contrary to our decision in City of Blackfoot.
Legal challenges to the conclusions of law made by an agency, when not preordained by
statute, case law, or rule, is a healthy impetus to motivating agencies into promulgating more
helpful and gap-filling rules. As the LLC explains, “[t]he resolution of the issues raised in this
appeal [is] important because it will provide clear answers for the regulated community and the
attorneys and consultants that represent them.” While the LLC’s legal arguments did not prevail,
the LLC still brought an appeal that had a reasonable basis in law. Accordingly, IDWR and the
Coalition are not entitled to attorney fees under Idaho Code section 12-117(1).
Furthermore, we deny the Coalition’s request for attorney fees under Idaho Code section
12-121. Attorney fees under section 12-121 are available in civil actions where a complaint is
filed—not in proceedings initiated by a petition for judicial review of an agency’s final order. I.C.
§ 12-121; Travelers Ins. Co. v. Ultimate Logistics (In re Idaho Workers Comp. Board), LLC, 167
Idaho 13, 24, 467 P.3d 377, 388 (2020). Here, the LLC’s appeal originates from Duffin’s petition
for judicial review of a final order from IDWR denying Duffin’s transfer application. A complaint
did not initiate this case. Thus, the Coalition is not entitled to attorney fees under section 12-121.
IV. CONCLUSION
We affirm the district court’s judgment that IDWR was within its statutory authority, and
did not violate any statutory provisions, when it denied Transfer Application 83160. As IDWR
and the Coalition are the prevailing parties on appeal, they are entitled to costs as a matter of course
under Idaho Appellate Rule 40.
Chief Justice BEVAN, Justices MOELLER, ZAHN, and HORTON, J. Pro Tem,
CONCUR.
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