Sagewillow v. Idaho Dept. of Water Res.

• Decision Date: 10 April 2003
• Docket Number: No. 27534.,27534.
• Citation: 70 P.3d 669,138 Idaho 831
• Parties: SAGEWILLOW, INC., Plaintiff-Appellant, v. IDAHO DEPARTMENT OF WATER RESOURCES, James Mays, Mays Land and Livestock, Blaine County Canal Company, Defendants-Respondents.
• Court: Idaho Supreme Court

70 P.3d 669

138 Idaho 831

SAGEWILLOW, INC., Plaintiff-Appellant, v. IDAHO DEPARTMENT OF WATER RESOURCES, James Mays, Mays Land and Livestock, Blaine County Canal Company, Defendants-Respondents.

No. 27534.

Supreme Court of Idaho, Idaho Falls, September 2002 Term.

April 10, 2003.

Rehearing Denied June 12, 2003.

Barker, Rosholt & Simpson, Boise; Holden, Kidwell, Hahn & Crapo, Idaho Falls, for appellant Sagewillow, Inc. Norman M. Semanko and Kent W. Foster argued.

Hon. Alan G. Lance, Attorney General; Phillip J. Rassier, Deputy Attorney General, Boise, for respondent Idaho Department of Water Resources. Phillip J. Rassier argued.

Givens Pursley, LLC, Boise, for respondents James Mays, Mays Land and Livestock, and Blaine County Canal Company. Michael C. Creamer argued.

EISMANN, Justice.

This is an appeal from an order of the Idaho Department of Water Resources declaring that various water rights owned by Sagewillow, Inc., had been forfeited in whole or in part due to nonuse. Because the Department incorrectly applied the resumption-of-use defense raised by Sagewillow, we vacate the order and remand this case for further proceedings.

I. FACTS AND PROCEDURAL HISTORY

In 1989 and 1993, Sagewillow, Inc., purchased various parcels of real property, together with appurtenant water rights, located in Butte County. The properties acquired in 1989 were known as the Knollin Ranch, the Bird Ranch, the North of Road Place, and the Homestead Place. The property acquired in 1993 was known as the Frew Place.

The water rights appurtenant to the Knollin and Bird Ranches originally consisted of fourteen surface water rights for irrigation with priorities ranging from 1906 to 1913, a surface water right for soil root zone storage with a priority of 1949, and two groundwater rights for irrigation from a total of sixteen wells with priorities of 1950 and 1957. The North of Road Place and Homestead Place each originally had an appurtenant groundwater right for irrigation with priorities of 1959 and 1960 respectively. The water rights appurtenant to the Frew Place originally consisted of two groundwater rights for irrigation with priorities of 1959 and 1972.

The water rights originally appurtenant to the properties purchased by Sagewillow could irrigate 2,383 acres. For approximately twenty years, however, the land irrigated on those properties totaled 1,412 acres. After purchasing the properties, Sagewillow began increasing the number of acres irrigated. Sagewillow irrigated 2,000 acres in 1991, 2,100 acres in 1992, and 2,390 acres in 1993.

In October 1990, Sagewillow filed an application to transfer the place of use and point of diversion of a groundwater right on the Bird Ranch. Nobody protested the transfer, and the Department of Water Resources (Department) formally approved it in October 1992.

In 1994, Sagewillow filed seven more transfer applications with the Department seeking to change the places of use for its six groundwater rights. James Mays, Mays Land and Livestock, and the Blaine County Canal Company (herein collectively referred to as "Mays") filed protests to the requested transfers, and the proceeding was expanded to adjudicate whether Sagewillow's surface and ground water rights had been forfeited by nonuse. Following a hearing, the Department held that the water rights appurtenant to the North of Road Place and Homestead Place had been forfeited and that the water rights appurtenant to the Knollin and Bird Ranches and the Frew Place had been partially forfeited. Under the Department's order, Sagewillow would only be permitted to irrigate 1,412 acres. The Department also conditionally approved Sagewillow's requested transfers and voided the transfer that it had approved in 1992.

Sagewillow sought judicial review of the Department's order in the district court of the seventh judicial district, which affirmed the order. Sagewillow then appealed to this Court. We held that, under the statutes in effect at that time, the Snake River Basin Adjudication district court had exclusive jurisdiction to review the Department's decision and the District Court of the Seventh Judicial District lacked jurisdiction to review the Department's order. We therefore vacated the decision of the district court and remanded this case to the Snake River Basin Adjudication district court. Sagewillow, Inc. v. Idaho Dept. of Water Resources, 135 Idaho 24, 13 P.3d 855 (2000).

In response, the legislature enacted Idaho Code § 42-1401D to provide that judicial review of Department actions that are subject to review under the Idaho Administrative Procedure Act shall not be heard in the Snake River Basin Adjudication district court, but shall be heard in the district court authorized by Idaho Code § 67-5272. Ch. 31, § 2, 2001 Idaho Sess. Laws 47, 48. The statute also provided that it applied to all cases pending on its effective date (March 2, 2001) or thereafter initiated. Id. As a result, on March 7, 2001, the Snake River Basin Adjudication district court transferred this case back to the District Court of the Seventh Judicial District, in and for Butte County. On March 27, 2001, without further briefing, argument, or hearing, the district court reissued its prior memorandum decision. Sagewillow then appealed.

II. ISSUES ON APPEAL

A. Did the Department of Water Resources correctly apply the doctrine of resumption of use?

B. Is there substantial and competent evidence supporting the finding that water rights acquired by Sagewillow, Inc., had been forfeited?

C. Did the Department of Water Resources err in voiding the water rights transfer that it had approved in 1992?

D. Was the Department of Water Resources authorized to participate as a party in a proceeding for judicial review of the Department's decision?

III. ANALYSIS

A party aggrieved by a final order in a contested case decided by an agency may file a petition for judicial review in the district court. IDAHO CODE §§ 67-5270(3) (2001). On an appeal from the district court's decision on that petition, this Court reviews the agency record independently of the district court's decision. Sanders Orchard v. Gem County, Idaho, 137 Idaho 695, 52 P.3d 840 (2002). This Court does not substitute its judgment for that of the agency as to the weight of the evidence presented. Id.; IDAHO CODE § 67-5279(1) (2001). Rather, this Court defers to the agency's findings of fact unless they are clearly erroneous. The agency order may be overturned only where it: (a) violates statutory or constitutional provisions; (b) exceeds the agency's statutory authority; (c) was made upon unlawful procedure; (d) is not supported by substantial evidence in the record as a whole; or (e) is arbitrary, capricious, or an abuse of discretion. In addition, the order must be upheld if substantial rights of the appellant have not been prejudiced. Sanders Orchard v. Gem County, Idaho, 137 Idaho 695, 52 P.3d 840 (2002); IDAHO CODE § 67-5279(4) (2001). If the order is not affirmed, it shall be set aside in whole or in part and the case remanded. IDAHO CODE § 67-5279(3)(e) (2001).

A. Did the Department of Water Resources Correctly Apply the Doctrine of Resumption of Use?

Idaho Code § 42-222(2) (1990) provides:

All rights to the use of water acquired under this chapter or otherwise shall be lost and forfeited by a failure for the term of five (5) years to apply it to the beneficial use for which it was appropriated and when any right to the use of water shall be lost through nonuse or forfeiture such rights to such water shall revert to the state and be again subject to appropriation under this chapter.

Idaho law has contained a similar provision since 1903.¹ This Court has held, however, that abandonments and forfeitures are not favored. Zezi v. Lightfoot, 57 Idaho 707, 68 P.2d 50 (1937). Therefore, "although statutory abandonment did actually occur, the forfeiture is not effective if, after the five-year period, the original owner or appropriator resumed the use of the water prior to the claim of right by a third party." Carrington v. Crandall, 65 Idaho 525, 531-32, 147 P.2d 1009, 1011 (1944). Sagewillow contends that it resumed use of its water rights during the period from 1989 to 1993. The parties disagree as to whether the resumption-of-use doctrine still applies, and, if so, how it should be applied in this case.

The Department contends that resumption of use only applies if there are no junior appropriators in the same or an interconnected water source. If there are junior appropriators, then the resumption of use will not apply. According to the Department, as a matter of law the resumption-of-use doctrine only applies to the most junior appropriator. Thus, in this case the Department's conclusion of law regarding resumption of use was as follows:

17. Other users are not required to assert a specific claim to the water rights or water represented by rights held by the user attempting to resume his use. The existence or establishment of a junior water right is sufficient claim to the water. The resumption doctrine cannot restore portions of water rights forfeited by Sage Willow's [sic] predecessor in interest to the detriment of other water right holders.

In making its argument, the Department relies upon the following language in Jenkins v. State, Dept. of Water Resources, 103 Idaho 384, 387-88, 647 P.2d 1256, 1259-60 (1982) (citations omitted):

If a water right has indeed been lost through abandonment or forfeiture, the right to use that water reverts to the state and is subject to further appropriation.

Other parties may then perfect a water right in those waters. Hence a person making a subsequent appropriation will be injured by resumption of the abandoned or forfeited water right. If a senior right has been abandoned or forfeited, the priority of the original appropriator is lost, and the junior appropriators move up the ladder of priority. If a senior right which had been forfeited or abandoned

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