Shokal v. Dunn
707 P.2d 441 (1985)
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Rule of Law:
When evaluating a water appropriation permit, an agency must consider the "local public interest," which includes broad factors like fish and wildlife habitat, recreation, aesthetic beauty, and water quality. An applicant must demonstrate that it is "reasonably probable" it can obtain project financing within the statutory time, not that the funds are secured at the time of the hearing.
Facts:
- On December 21, 1978, Trout Co. applied to the Department of Water Resources for a permit to appropriate water from Billingsley Creek for a proposed fish propagation and hydropower generation facility.
- Numerous local residents, property owners, and existing water users filed protests against the application.
- During the permitting process, the Department of Water Resources imposed stringent water quality standards on the proposed project.
- Trout Co. determined that its original project design was unable to comply with these new standards.
- In response, Trout Co. submitted a new document, “Contemplated Operational Criteria,” which substantially reworked the project, scaling down the facility and significantly altering its size, rearing capacity, water volume, and velocity.
Procedural Posture:
- Trout Co. applied to the Idaho Department of Water Resources for a water appropriation permit.
- After protestants filed objections, the Department held a hearing and granted the permit.
- Protestants sought judicial review in the district court (a trial court), where Judge Schroeder reversed and remanded the case to the Department for further proceedings.
- The Department held a new hearing and conditionally approved the permit, requiring Trout Co. to submit new plans.
- After Trout Co. submitted substantially revised plans, the Department denied protestants' request for another hearing and issued a final order granting the permit.
- Protestants (appellants) again appealed to the district court, where Judge Smith reversed the Department and remanded for a new hearing.
- The case was then appealed to the Idaho Supreme Court for review of the district court's decision.
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Issue:
Does an administrative agency commit a procedural error by issuing a final order on a water permit application that was substantially amended, without affording protesting parties a new hearing to present evidence and cross-examine witnesses regarding the amendments?
Opinions:
Majority - Justice Bistline
Yes. An agency commits a procedural error by failing to hold a new hearing when a permit application is so substantially changed that it effectively constitutes an amended application. The court reasoned that Trout Co.'s "Operational Criteria" document constituted a substantial change that effectively amended its application. Under Idaho Code, amended applications are subject to the same protest and hearing procedures as original applications, which guarantee parties in a contested case the right to present evidence and conduct cross-examination. By denying the protestants a new hearing on the substantially altered plans, the Director violated these statutory procedural requirements. The court also clarified two key standards for the agency to apply on remand: (1) an applicant need only show it is "reasonably probable" it can obtain financing, not that it has the funds "then and there"; and (2) the "local public interest" analysis must be broad, including consideration of environmental, recreational, and aesthetic values.
Analysis:
This decision significantly defines the scope of the "local public interest" in Idaho water law, expanding it beyond purely economic considerations to include environmental, aesthetic, and recreational values protected by the public trust doctrine. By adopting the more flexible "reasonably probable" standard for financing, the court balanced the need to prevent speculative appropriations with the goal of encouraging responsible development. Furthermore, the ruling reinforces procedural due process in administrative law, ensuring that interested parties have a meaningful opportunity to be heard when an applicant makes substantial post-hearing amendments to a proposed project.
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