In the Matter of DISTRIBUTION OF WATER TO VARIOUS WATER RIGHTS HELD BY OR FOR the BENEFIT OF A & B IRRIGATION DISTRICT, American Falls Reservoir District # 2, Burley Irrigation District, Milner Irrigation District, Minidoka Irrigation District, North Side Canal Company, and Twin Falls Canal Company.
Gary Spackman, in his capacity as Interim Director of the Idaho Department of Water Resources, and the Idaho Department of Water Resources, Respondents-Respondents on Appeal, A & B Irrigation, American Falls Reservoir District # 2, Burley Irrigation District, Milner Irrigation District, Minidoka Irrigation District, North Side Canal Company, Twin Falls Canal Company, Petitioners-Appellants, and United States of America, Bureau of Reclamation, Petitioners-Respondents on Appeal, and Idaho Ground Water Appropriators, Inc., Intervenor-Respondent-Cross Appellant, and The City of Pocatello, Intervenor-Respondent-Cross Appellant.
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Barker Rosholt & Simpson, LLP, Twin Falls, Capitol Law Group, PLLC, Gooding and Fletcher Law Office, Burley, for appellants. Travis Thompson argued.
Hon. Lawrence G. Wasden, Attorney General, Boise, for respondents. Chris Bromley argued.
Racine, Olson, Nye, Budge & Bailey, Chtd., Pocatello, for respondent-cross-appellant Idaho Ground Water Appropriators. Thomas J. Budge argued.
Arthur Dean Tranmer, Pocatello and White & Jankowski, Denver, Colorado, for respondent-cross-appellant City of Pocatello. Sara A. Klahn argued.
This is an appeal from a district court's order on petition for judicial review from a final order from the Director of the Idaho Department of Water Resources (Department or IDWR). On appeal, the senior surface water rights holders (Surface Water Coalition or Coalition)  challenge the court's order affirming the methodology established by the Director for determining material injury caused by the pumping of junior groundwater rights holders (Idaho Groundwater Appropriators or Groundwater Appropriators). The Coalition also appeals the court's failure to require the Director to issue a single final order. The Groundwater Appropriators and Intervenor City of Pocatello (the City) assert on cross-appeal that the proper evidentiary standard for determining material injury is a preponderance of the evidence, rather than clear and convincing evidence.
I. FACTUAL AND PROCEDURAL BACKGROUND
The surface and ground waters in the Snake River Basin are hydraulically connected, such that groundwater pumping can decrease the natural flows in the Snake River and its tributaries. In the 1980s, Idaho began to adjudicate water rights in the Basin in order to determine their nature, extent and priority. In the 1990s, Idaho began to conjunctively manage surface and ground water rights pursuant to rules (Conjunctive Management Rules or Rules) promulgated by the Department. In 2007, this Court rejected a facial challenge to the Rules' constitutionality. Am. Falls Reservoir Dist. No. 2 v. Idaho Dep't of Water Res., 143 Idaho 862, 154 P.3d 433 (2007) ( AFRD # 2 ).
This appeal arises from a January 2005 delivery call initiated by the Coalition which alleged that the Coalition was suffering material injury due to pumping by the Groundwater Appropriators. In his initial order responding to the delivery call, dated February 14, 2005, the Director wrote:
Based upon the Idaho Constitution, Idaho Code, the conjunctive management Rules, and decisions by Idaho courts, ... it is clear that injury to senior priority surface water rights by diversion and use of junior priority ground water rights occurs when diversion under the junior rights intercept a sufficient quantity of water to interfere with the exercise of the senior primary and supplemental water rights for the authorized beneficial use. Because the amount of water necessary for beneficial use can be less than decreed or licensed quantities, it is possible for a senior to receive less than the decreed or licensed amount, but not suffer injury. Thus, senior surface water right holders cannot demand that junior ground water right holders diverting water from a hydraulically-connected aquifer be required to make water available for diversion unless that water is necessary to accomplish an authorized beneficial use.
Whether the senior priority water rights held by or for the benefit of members of the Surface Water Coalition are injured depends in large part on the total supply of water needed for the beneficial uses authorized under the water rights held by members of the Surface Water Coalition and available from both natural flow and reservoir storage combined. To administer junior priority ground water rights while treating the natural flow rights and storage rights of the members of the Surface Water Coalition separately would either: (1) lead to the curtailment of junior priority ground water rights, absent mitigation, when there is insufficient natural flow for the senior water rights held by the members of the Surface Water Coalition even though the reservoir space allocated to members of the Surface Water Coalition is full; or (2) lead to the curtailment of junior priority ground water rights, absent mitigation, anytime when the reservoir space allocated to the members of the Surface Water Coalition is not full even though the natural flow water rights held by members of the Surface Water Coalition were completely satisfied. Either outcome is wholly inconsistent with the provision for " full economic development of underground water resources" in Idaho Code § 42-226 articulated as " optim[al] development" in Baker v. Ore-Ida Foods, Inc., 95 Idaho 575, 584, 513 P.2d 627, 636 (1973).
The Director initiated a contested case, ordered the Coalition members to submit certain information about their water rights, and stated that he would determine the extent of any injury after the annual issuance of April 1st release forecasts.
On May 2, 2005, the Director issued an amended order. The amended order's findings of fact contained a section titled " Water Supply Historically Available and Predicted to be Available in 2005." In summary, this section reiterated the statement that material injury only exists if a senior water right holder lacks sufficient water to meet its authorized
beneficial uses and that this amount may differ from the senior's total decreed or licensed right. Working from this premise and " for the limited purpose of assessing reasonably likely material injury" caused by diversion of ground water by holders of junior water rights, the Director projected the minimum amount of natural flow and carryover storage water necessary for each member of the Coalition to meet its needs. The Director also ordered the Groundwater Appropriators to provide replacement water or curtail their consumptive uses.
On May 11, 2005, the Director granted the City of Pocatello's petition to intervene. Over the course of the next three years, the Director issued a series of supplemental orders that assessed the predicted amount of replacement water necessary for mitigation and/or retroactively determined the amount actually left wanting at the close of each irrigation season.
The third of these supplemental orders summarized the Director's methodology for determining whether senior surface water right holders were likely to incur material injury as follows:
(1) Determine the minimum full water supply needed for irrigation (natural flow and reservoir storage releases) by the members of the Surface Water Coalition;
(2) Compare the forecast as of April 1, 2005, for unregulated inflow from the Upper Snake River Basin for the time period of April 1, 2005, through July 31, 2005, with historic unregulated inflow from the Upper Snake River Basin for the period of April 1 through July 31;
(3) Select a year or years of similar unregulated inflow and assume that: (a) natural flow diversions in 2005 will be essentially the same as the natural flow diversion in the similar year(s); (b) water stored in the reservoirs after April 1 in the similar year(s) added to the volume actually stored as of April 1, 2005, adjusted for evaporation, will be the total reservoir storage available for release and use in 2005; and (c) the sum of the predicted natural flow diversions and the predicted reservoir storage, adjusted for evaporation, constitutes the [sic] " the predicted 2005 water supply" ; and
(4) For each member of the Surface Water Coalition, subtract the predicted total water supply for 2005 from the minimum full water supply needed, and to the remainder add the amount of carryover storage reasonably needed assuming a drought year in 2006, unless the remainder is negative and the value equals or exceeds the reasonably needed carryover storage. The extent of the material injury predicted, or presumed, for each member of the Surface Water Coalition equaled the sum of predicted shortage from the minimum full water supply, if any, and the amount of predicted short fall [sic] in carryover storage, if any.
(5) Provide a procedural framework under which the water supply needed by each member of the Surface Water Coalition could be increased above the minimum full supply assumed to be needed, up to the limits of the water rights held by or for the benefit of members of the Coalition, or decreased from the minimum full supply assumed to be needed, based on actual climatic and water supply conditions for 2005, and the extent of material injury correspondingly adjusted.
(footnotes omitted). This order added the following footnote to the first paragraph:
Water rights held by or for the benefit of members of the Surface Water Coalition entitle the diversion of up to the full quantities of water authorized by the respective rights when needed for the full beneficial use defined under the rights. For a variety of reasons (e.g., cropping patterns, changes in irrigation methods, reductions in irrigated acreage, weather, etc.) the full quantities of water authorized by the respective rights are often not needed, and junior priority rights are not subject to curtailment to provide for the differences,
if any, between the maximum quantities of water authorized by the rights and the lesser quantities of water actually needed. The Director determined that 1995 was the most recent year that the members of the Surface Water Coalition received a water supply sufficient for the beneficial uses made under the respective rights and, based on available information, used the amounts of water diverted during the 1995 irrigation season as measures of the quantities of water needed for current conditions (herein termed " minimum full water supply" ), while recognizing that amounts of water up to the maximum quantities authorized by the water rights held by or for the benefit of the Coalition could be demanded upon a showing of need. To date, the Surface Water Coalition has not shown such need.
On April 29, 2008, the Department hearing officer reviewing the Director's several orders issued a 68-page opinion and recommendation. The hearing officer recognized that the Director's methodology for determining material injury " departs from the practice of recognizing a call at the level of the licenses or decrees, understanding that if less water is needed less will be delivered." The hearing officer observed:
Inherent in the application of the minimum full supply is the assumption that, if it accurately defines need, use of water above that amount would not be applied to a beneficial use and would constitute waste. This strains against the assumption that the senior users are entitled to the full extent of their ... licensed or decreed rights which at some point has been determined to be an amount they could beneficially use. The hedge built into the concept of minimum full supply as initially outlined in the May 2, 2005 Order is that the minimum full supply is a base that can be raised if more is needed to satisfy crop and storage requirements. Inherent in the prospect of using a baseline approach in ground water to surface water use is the possibility that it might translate back to the surface to surface administration and change the historical practice.
Nonetheless, the hearing officer concluded that " [t]he attempt to project the amount of water that is necessary for the members of [the Coalition] to fully meet crop needs within the licensed or decreed amounts is an acceptable approach to conjunctive management...."
Noting that " [t]he use of the term ‘ minimum full supply’ has become a lightning rod of discontent of all parties," the hearing officer concluded that " there have been applications of the concept of a minimum full supply that should be modified if the use of the protocol is to be retained," " [t]here must be adjustments as conditions develop if any baseline supply concept is to be used," " [u]sing the minimum full supply as a fixed amount in effect readjudicates a water right outside the processes of the SRBA," and " it is time for the Department to move to further analysis to meet the goal of the minimum full supply but with the benefit of the extended information and analysis offered by the parties and available to its own staff." The hearing officer explained that " [t]he concept of a baseline is that it is adjustable as weather conditions or practices change, and that those adjustments will occur in an orderly, understood protocol." The hearing officer made several recommendations as to how to improve the baseline methodology by making it more responsive to actual conditions.
The hearing officer determined that the Director had acted reasonably by ordering curtailment or mitigation sufficient to meet only one year, rather than multiple years, of the Coalition's carryover storage needs. The hearing officer recommended that replacement water plans ordered by the Director comply with the procedural steps necessary for approval of mitigation plans, as set forth in the Conjunctive Management Rules. Finally, the hearing officer concluded that the Director had erred by accepting Twin Falls Canal Company's full headgate delivery as
being 3/4 of a miner's inch per acre, because it had been established by a prior judicial determination to be 5/8 of a miner's inch.
On September 5, 2008, the Director issued his Final Order Regarding the Surface Water Coalition Delivery Call (Final Order). The Director adopted most of the hearing officer's findings and recommendations, and offered additional comment only as to those issues with which he disagreed or felt that additional explanation was necessary. The Director did not discuss the hearing officer's recommendation regarding the measure of Twin Falls Canal Company's full headgate delivery.
In the Final Order, the Director substituted the term for " reasonable in-season demand" for " minimum full supply" and stated that " [b]ecause of the need for ongoing administration, the Director will issue a separate final order before the end of 2008 detailing his approach for predicting material injury to reasonable in-season demand and reasonable carryover for the 2009 irrigation season." Although the Director agreed with the hearing officer that mitigation plans are a useful tool, he concluded that replacement water plans should not be forced to comply with the procedural requirements applicable to mitigation plans. The Director reasoned that approval as a mitigation plan would require curtailment of junior ground water users without a hearing because they could not formulate a mitigation plan until they knew how much water would be owed to the Coalition. The Director concluded that a formal mitigation plan should be submitted after a record has been developed through the hearing process, but that " [a]uthorizing replacement water plans ensures that the senior water user making the delivery call is made whole during the pendency of the ...