In re WD170, 35175.

• Decision Date: 27 October 2009
• Docket Number: No. 35175.,35175.
• Citation: 220 P.3d 318
• Court: Idaho Supreme Court
• Parties: In re IDAHO DEPARTMENT OF WATER RESOURCES AMENDED FINAL ORDER CREATING WATER DISTRICT NO. 170. Thompson Creek Mining Company, Petitioner-Appellant, v. Idaho Department of Water Resources, Respondent.

220 P.3d 318

In re IDAHO DEPARTMENT OF WATER RESOURCES AMENDED FINAL ORDER CREATING WATER DISTRICT NO. 170 Thompson Creek Mining Company, Petitioner-Appellant, v. Idaho Department of Water Resources, Respondent.

No. 35175.

Supreme Court of Idaho, Boise, September Term.

October 27, 2009.

Moffatt, Thomas, Barrett, Rock & Fields, Chtd., Boise, for appellant. Dylan B. Lawrence argued.

Hon. Lawrence G. Wasden, Attorney General, Boise, for respondents. Andrea L. Courtney, Deputy Attorney General, argued.

BURDICK, Justice.

This case arises out of the creation of Water District No. 170 (WD170) by the director (Director) of the Idaho Department of Water Resources (IDWR). Thompson Creek Mining Company (Thompson Creek) alleges that the Director violated procedural due process under both the Idaho and United States Constitutions in creating WD170 without following proper hearing guidelines as established under the Idaho Administrative Procedure Act (IDAPA). Thompson Creek further alleges that the Director exceeded his mandate in creating WD170 without substantial evidence that the district was required in order to properly administer uses of the water resource. Thompson Creek seeks attorney fees on appeal. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

On August 20, 2004, the State of Idaho signed the Wild & Scenic Rivers Agreement (WSRA). Following Thompson Creek's objection to the WSRA, the Snake River Basin Adjudication (SRBA) court approved the WSRA, with certain qualifications to the enforcement of the WSRA, notably holding that only signatories to the agreement would be bound by its terms.

On October 7, 2005, the Director of IDWR issued a public notice describing the proposed water district, WD170, the reasons for the proposed creation of that district, and the time and place of the public meeting and hearing (7:00 p.m. on November 9, 2005, in Challis, Idaho). The public notice was mailed to each water right holder within proposed WD170's geographic boundaries (administrative basins 71 & 72), and published in two local newspapers of general circulation.

At 7:00 p.m. on November 9, 2005, pursuant to the Public Notice, the Director of IDWR conducted a public hearing on the proposed creation of WD170. The transcript of that hearing reveals that, although the meeting began at 7:00 p.m., it did not go on the record until 8:10 p.m.

The Director of IDWR issued a final order establishing WD170 on March 6, 2006, and Thompson Creek filed a petition for reconsideration on March 17, 2006. The Director issued an amended final order on April 6, 2006.

On May 5, 2006, Thompson Creek filed a petition for judicial review. On February 22, 2008, the district court upheld IDWR's amended final order. On April 2, 2008, Thompson Creek filed its notice of appeal to this Court, and filed an amended notice of appeal on June 3, 2008.

II. STANDARD OF REVIEW

"In an appeal from a district court, where the court was acting in its appellate capacity under IDAPA, the Supreme Court reviews the agency record independently of the district court's decision." Spencer v. Kootenai County, 145 Idaho 448, 452, 180 P.3d 487, 491 (2008). If the sufficiency of factual findings was challenged before the district court and subsequently challenged in this Court, we review the agency record de novo to see if those factual findings are supported by substantial and competent evidence. Where the agency record provides substantial and competent evidence supporting the agency's findings of fact, and the agency conclusions of law follow from those facts, and the district court affirmed the agency decision, we affirm the district court's decision as a matter of procedure. See Losser v. Bradstreet, 145 Idaho 670, 672, 183 P.3d 758, 760 (2008).

Judicial review of a final decision of IDWR is governed by IDAPA, Title 67, chapter 52 of the Idaho Code. I.C. § 42-1701A(4). Under IDAPA, the Court reviews an appeal from an agency decision based upon the record created before the agency. I.C. § 67-5277; Dovel v. Dobson, 122 Idaho 59, 61, 831 P.2d 527, 529 (1992). As to the weight of the evidence on questions of fact, this Court does not substitute its judgment for that of the agency. Spencer, 145 Idaho at 452, 180 P.3d at 491. The Court shall affirm an agency decision unless the Court finds the agency's findings, inferences, conclusions, or decisions were: "(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); see Barron v. Idaho Dep't of Water Res., 135 Idaho 414, 417, 18 P.3d 219, 222 (2001). The party challenging the agency decision must show that the agency erred in a manner specified in I.C. § 67-5279(3), and that a substantial right of the petitioner has been prejudiced. I.C. § 67-5279(4); Barron, 135 Idaho at 417, 18 P.3d at 222.

III. ANALYSIS

This Court must consider four issues. First, whether the Director of IDWR complied with IDAPA in creating WD170.¹ Second, whether the Director correctly interpreted Idaho Code § 42-604, and whether his decision to create WD170 is based upon substantial evidence in the record. Third, whether Thompson Creek demonstrated that it was deprived of a property interest through the State's creation of WD170. Fourth, whether Thompson Creek is entitled to attorneys fees on appeal. We will address each of these issues in turn.

A. IDWR Complied with IDAPA in Creating WD170

This Court, in Nettleton v. Higginson, held that "[t]he requirement of procedural due process is satisfied by the statutory scheme of Title 42 of the Idaho Code."² 98 Idaho 87, 91, 558 P.2d 1048, 1052 (1977). Idaho Code § 42-1701A provides that all IDWR hearings shall be conducted in accordance with IDAPA. Idaho Code § 42-604 specifically requires notice and a hearing prior to "entering an order creating, modifying, or abolishing a district" and states that "[t]he director's order is subject to judicial review" in accordance with IDAPA. Therefore, analysis of whether the necessary process was provided becomes an inquiry into whether the provisions of IDAPA were substantially complied with.

Thompson Creek argues that IDWR violated IDAPA in three ways: 1) failing to record the entire public hearing held by the Director prior to the creation of WD170, in violation of I.C. § 67-5242(3)(d); 2) failing to provide an impartial and disinterested decision-maker, as required by Eacret v. Bonner County, 139 Idaho 780, 784, 86 P.3d 494, 498 (2004); and 3) depriving water rights holders the opportunity to provide meaningful input regarding the creation of WD170.

1. Record of Hearing

Thompson Creek argues that the Director failed to record the entire hearing, in violation of I.C. § 67-5242(3)(d), and I.C. § 67-5279(3)(a), (c). IDWR responds that Thompson Creek's argument on this point should be deemed waived as it was not raised in Thompson Creek's post-hearing Written Comments, its Petition for Reconsideration, or its Objection to Administrative Record (pursuant to Idaho Rule of Civil Procedure 84(j)). IDWR argues alternatively that the unrecorded "hearing" that Thompson Creek refers to was merely an informal question-and-answer session that preceded the formal hearing on the creation of WD170, and was not relied upon by the Director in his decision to create WD170.

a. Thompson Creek Waived The Objection

Idaho Rule of Civil Procedure 84 governs judicial review of agency actions by the district court, and I.R.C.P 84(j) concerns settlement of the record, providing, inter alia:

Any party may object to the transcript and record with [sic] fourteen (14) days from the date of mailing of the notice of the parties that the transcript and record has been lodged with the agency. Upon failure of the parties to file an objection within that time period, the transcript and record shall be deemed settled.

An issue not raised below will generally not be considered or reviewed on appeal. Mountainview Landowners Coop. Ass'n v. Cool, 142 Idaho 861, 866, 136 P.3d 332, 337 (2006). This Court held, in Manookian v. Blaine County, that I.R.C.P. 84(j) applies to administrative decisions being appealed to a district court, and failure to raise an issue before an administrative agency will preclude that issue from being heard upon review by the district court. 112 Idaho 697, 700, 735 P.2d 1008, 1011 (1987).

The record shows that Thompson Creek did file an objection to the record, but failed to object upon the basis that the transcript of the hearing was inadequate for failure to include the portion of the hearing that took place from 7:00-8:10 p.m. Thompson Creek argues that I.R.C.P. 84(j) is inapplicable as Thompson Creek is challenging a procedural error at the hearing itself rather than an error in the preparation of the transcript of the record. Nothing within the rule supports this attempted distinction. Finally, Thompson Creek alleges that this error could not have been corrected by the Director and, therefore, raising the objection would have been fruitless and should be excused. In fact, a proper objection to the record would have provided IDWR with an opportunity to reconsider the sufficiency of the record, and at a minimum would have preserved the issue for appeal. See Idaho R. Civ. P. 84(j) ("The agency's decision on the objection and all evidence, exhibits, and written presentations on the objection shall be included in the record on petition for review.") (emphasis added).

Thompson Creek first objected to the adequacy of the record, on the grounds that it failed to include a transcript of the first seventy minutes of the hearing, when appealing IDWR's decision to the district court below. Therefore, we find that Thompson Creek waived its objection to the sufficiency of the hearing transcript both by failing to include the objection in its...