Miles v. Idaho Power Co.

Decision Date08 August 1989
Docket NumberNo. 16614,16614
Citation778 P.2d 757,116 Idaho 635
Parties, 107 P.U.R.4th 437 Harold C. MILES, Individually and on Behalf of all Ratepayers of the Idaho Power Company, Plaintiff-Appellant, v. IDAHO POWER COMPANY, a Maine Corporation, and the State of Idaho, Acting By and Through the Honorable John V. Evans, Governor, and Acting By and Through the Legislators of the State of Idaho; and the State of Idaho Acting By and Through the Idaho Public Utilities Commission, and Commissioners Richard High, Perry Swisher and Conley Ward in Their Official Capacities; and the State of Idaho, Acting By and Through the Idaho Department of Water Resources, the Idaho Water Resources Board, and its Executive Director, Ken Dunn, in his Official Capacity, Defendants-Respondents.
CourtIdaho Supreme Court

Seiniger & Nevin, Boise, for plaintiff-appellant. Breck Seiniger, Jr., argued.

Thomas G. Nelson, Twin Falls, for defendant-respondent, Idaho Power Co. Thomas G. Nelson, argued.

Jim Jones, Atty. Gen. and John J. McMahon, Deputy Atty. Gen., Boise, for defendant-respondent, State of Idaho. John J. McMahon, argued on rehearing.

JOHNSON, Justice.


This case involves an agreement between the State of Idaho and Idaho Power Company (Idaho Power), commonly referred to as the Swan Falls Agreement (the agreement). The agreement and the subsequent implementing legislation attempted to resolve concerns over competing water rights in and around the Snake River. In brief, the agreement provided for the subordination of certain water rights claimed by Idaho Power to those of subsequent upstream users. The implementing legislation provided, among other things, that the Idaho Public Utilities Commission (IPUC) when "setting or reviewing the revenue require ment of any utility ... shall accept [the agreement] as reasonable and in the public interest for all purposes...." 1985 Idaho Sess.Laws ch. 14, § 3, p. 20. The appellant, Harold C. Miles, filed a declaratory judgment action on behalf of himself and all similarly situated Idaho Power ratepayers, seeking to have part of the implementing legislation declared unconstitutional.

This appeal followed an order of the district court dismissing the case pursuant to I.R.C.P. 12(b)(6) (1980) for failure to state a claim upon which relief could be granted. The district court did not reach the merits of Miles' challenge, finding instead that Miles lacked standing and that the controversy was not ripe for judicial resolution. Our standard for reviewing a Rule 12(b)(6) dismissal is the same as our summary judgment standard. Tomchak v. Walker, 108 Idaho 446, 700 P.2d 68 (1985). The nonmoving party is entitled to have all inferences from the record viewed in his favor and only then may the question be asked whether a claim for relief has been stated.

We affirm the decision of the trial court, but on different grounds. We hold that the controversy is justiciable. We reject respondents' arguments regarding the political question, standing and ripeness doctrines. We also hold that the implementing legislation is not violative of the equal protection clause or due process clause of the fourteenth amendment to the Constitution of the United States. We decline to address the appellant's argument that the legislation violates the state constitution's proscription against special legislation because that question was not presented to the district court below.



This is another case involving water rights in the Snake River at Swan Falls. A complete and extensive discussion of the history of this controversy is included in Idaho Power Company v. State, 104 Idaho 575, 661 P.2d 741 (1983).

To avoid multiple litigation between itself and thousands of water-permit holders of water rights in the Snake River, Idaho Power sought a compromise with the State. The ensuing discussions between the parties resulted in the agreement. Subsequently, our legislature enacted legislation to implement the agreement. See 1985 Idaho Sess.Laws, ch. 14-17; ch. 18, §§ 1, 3, 4; ch. 162, 204, pp. 20-31, 437, 514. The purpose of the agreement was to resolve the continuing controversies surrounding water rights on the Snake River. The agreement, among other things, called for Idaho Power's claim to Snake River water rights for its Swan Falls hydroelectric facility of 8,400 c.f.s. (measured at the Murphy gauging station) to be subordinated down to an average daily flow of 3,900 c.f.s. from April 1 to October 31, and of 5,600 c.f.s. from November 1 to March 31. The purpose of the agreement concerning subordination was to make available more water for future appropriators and to assist in the expansion of other beneficial uses of the water in the Snake River. See I.C. § 42-203B (Supp.1988). The focus of this litigation is on sections 2 and 3 of S.B. No. 1005, (the implementing legislation), enacted by the legislature and signed into law by the governor in 1985. 1985 Idaho Sess.Laws, ch. 14, §§ 2 and 3, p. 20, (not codified). These sections limit the jurisdiction of the IPUC by prohibiting it from considering whether Idaho Power could have protected its water rights and hydroelectric generation in a manner inconsistent with the agreement. They also required the IPUC, when reviewing revenue requirements of Idaho Power, to accept the agreement as reasonable and in the public interest.

Sections 2 and 3 read as follows:

SECTION 2. PUBLIC UTILITIES COMMISSION--JURISDICTION. The Idaho public utilities commission shall have no jurisdiction to consider in any proceeding, whether instituted before or after the effective date of this act, any issue as to whether any electric utility, including Idaho Power Company, should have or could have preserved, maintained or protected its water rights and hydroelectric generation in a manner inconsistent with the contract entered into by the governor and the Idaho Power Company on October 25, 1984.

SECTION 3. EFFECT OF AGREEMENT. In any proceeding before the Idaho public utilities commission including, but not limited to, a proceeding in which the commission is setting or reviewing the revenue requirement of any electric utility, including Idaho Power Company, the commission shall accept as reasonable and in the public interest for all purposes, the contract entered into by the governor and the Idaho Power Company on October 25, 1984, including without limitation, the effects of implementation of such contract on the utility's revenue requirements and hydroelectric generation.

Miles is a customer and ratepayer of Idaho Power. He brought a complaint in district court pursuant to the Uniform Declaratory Judgment Act, I.C. §§ 10-1201 to 10-1217 (1979) challenging the constitutionality of the implementing legislation. Specifically, the complaint alleged that the legislation precludes the IPUC from taking into account, when setting the rate base for Idaho Power, the company's diminished water rights and resulting reduced value of Idaho Power's generating facilities on the Snake River. Consequently, Miles alleged in his complaint "the combined effect of the 'Swan Falls Agreement' and the 'Swan Falls Legislation' is that the ratepayers will be required to pay rates for electricity to Idaho Power on a rate base (for facilities) that no longer exists or is substantially diminished in value, thus constituting a deprivation of property without due process of law and without just compensation."

Miles included the following illustration in his complaint:


Idaho Power Company originally had four turbines at the Brownlee Dam. Within the last several years it added the Brownlee No. 5 unit at a cost of $62,000,000. Under the reduced flows of 5,600 c.f.s. and 3,900 c.f.s. the 5th unit would be rendered essentially valueless and useless because the first four turbines can handle most of the reduced flow, yet the "Swan Falls Agreement and Legislation" would leave the unit in the rate base and require the ratepayers to continue to pay a rate-of-return thereon.

He also alleged:

The excess and unconstitutional charges to be imposed upon the Idaho Power Company ratepayers will total many millions of dollars per year. The effect of the scheme propounded by the agreement and legislation is to take money from the ratepayer and give it to future appropriators (in the form of water) without compensation to the ratepayers.

Miles requested that the district court declare that:

(1) the implementing legislation limiting the IPUC jurisdiction be declared null and void;

(2) a mechanism be established to allow for compensation to Idaho Power ratepayers for all new and increased diversions from the Snake River system occurring on or after July 1, 1985;

(3) the Department of Water Resources be required to condition all the water permits issued on or after July 1, 1985, by requiring the appropriator to make payment (either by purchase or rental) to Idaho Power to compensate for decreased generating capacity caused by diversion; and

(4) the Idaho Public Utilities Commission be required to make appropriate rate adjustments to the Idaho Power rate base as necessary to compensate the ratepayers fully for increased power rates occasioned by the diversion.

Idaho Power and the State brought a motion to dismiss pursuant to I.R.C.P. 12(b) for failure to state a claim on which relief could be granted. After a hearing, the trial court issued an extensive memorandum decision which dismissed Miles' claims. Without discussing the merits, the trial court considered "the case or controversy requirements" of the standing, ripeness and political question doctrines. The trial court concluded that Miles lacked standing, because he only stated a generalized grievance suffered by all Idaho Power ratepayers, and that the issue was not ripe for adjudication because Miles was not presently being deprived of any protectable property interest. The court ruled that no political question was...

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