Could the Idaho Water Resource Board issue revenue bonds to finance a stand-alone hydroelectric project that did not provide irrigation or other water-development benefits?

Opinion 85-2: Water Resource Board could finance a stand-alone hydroelectric project with revenue bonds

Plain-English summary

The Director of the Department of Water Resources asked whether the Idaho Water Resource Board could issue revenue bonds and loan the proceeds to a local water-project sponsor that planned to build a hydroelectric facility with no irrigation or other water-development benefits. The AG said yes. Idaho Code § 42-1734(x) authorized the Board to issue revenue bonds and loan the proceeds to a "local water project sponsor." The statute did not define "water project," and the AG worked through the standard tools of construction. The constitutional grant in Article 15, § 7 of the Idaho Constitution gave the Water Resource Agency power to "generate and wholesale hydroelectric power at the site of production," not just for projects with irrigation benefits. Idaho Code § 42-1731 cast the Board's mission as conservation, development, and optimum use of water resources. § 42-1734(s) separately authorized revenue bonds for irrigation rehabilitation "and for water projects," language that would be redundant if "water project" meant "irrigation project." The administrative agency's own Rule 2.3 (April 15, 1983) defined eligible projects to include "energy production" alongside irrigation, drainage, water supply, flood control, and others. Reading those sources together, the AG concluded that "water project" was broad enough to cover a stand-alone hydroelectric facility, and that the Idaho Supreme Court's decision in Idaho Water Resource Board v. Kramer (1976) had already settled that issuance of revenue bonds by the Board was constitutionally permissible.

Currency note

This opinion was issued in 1985. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

The Idaho Water Resource Board was established under Article 15, § 7 of the Idaho Constitution, which voters added to the constitution in 1964. The amendment created a Water Resource Agency with power to formulate and implement a state water plan; construct and operate water projects; issue bonds, without state obligation, to be repaid from project revenues; generate and wholesale hydroelectric power at the site of production; appropriate public waters as trustee for Agency projects; and acquire, transfer, and encumber title to real property for water projects, all under such laws as the legislature might prescribe.

Idaho Code § 42-1732 located the Board within the Department of Water Resources but preserved its independent constitutional and statutory existence. § 42-1731 declared the Board's mission: conservation, development, and optimum use of water resources, and protection of Idaho's waters from out-of-state diversion, through "a coordinated, integrated, multiple use water resource policy." § 42-1734(x) gave the Board the power to "loan, without prior legislative approval, the proceeds of the sale of revenue bonds to the local water project sponsor or sponsors." § 42-1734(s) separately authorized revenue bonds "for the rehabilitation and repair of existing irrigation projects and irrigation facilities, and for water projects."

The act in question did not define "water project." Legislative history was scant and case law absent. The AG had to use the standard tools of statutory construction.

What the AG concluded at the time

The constitutional grant included hydroelectric power

Article 15, § 7 expressly authorized the Water Resource Agency "to generate and wholesale hydroelectric power at the site of production." The AG read that authority as not limited to hydroelectric projects with associated irrigation benefits. Reading the bond-financing power more narrowly, to exclude pure hydroelectric projects, would be incongruous with the Agency's parallel direct-generation authority.

Statutory construction principles required ordinary meaning

The AG quoted four Idaho Supreme Court cases on construction: Nicolaus v. Bodine (assume the legislature intended the ordinary import of words used); Unity Light & Power v. City of Burley (when language has a definite, clear meaning, courts must give it effect); Messenger v. Burns (look at context, object, evils to be remedied, history, public policy, contemporaneous construction); and State, Department of Law v. One 1955 Willys (where a statute is clear and unambiguous, the expressed legislative intent must be given effect). State v. Hoch added that a statute must be construed in light of the reason, object, and purpose to ascertain and effectuate legislative intent.

§ 42-1734(s) would be superfluous if "water project" meant "irrigation"

§ 42-1734(s) authorized revenue bonds "for the rehabilitation and repair of existing irrigation projects and irrigation facilities, and for water projects." The AG observed that if "water project" meant only "irrigation project," the second clause would simply repeat the first. To give effect to every word, "water project" had to be broader than "irrigation project."

The revolving development fund definition supported a broad reading

Idaho Code § 42-1751(d), in a related code section concerning the revolving development fund, defined "project" as "any project by means of which water shall be utilized or benefits accrue within this state for purposes within the limitations of this act." A hydroelectric project necessarily utilizes water within the state, and if found worthy of revenue bond support, would be within the act's limitations.

Agency interpretation deserved deference

On April 15, 1983, the Water Resource Agency had adopted Rule 2.3, defining "eligible project" as a project in conformance with the State Water Plan, approved for financing by an eligible financial institution. The rule listed examples: drainage or irrigation, domestic and municipal water supplies, "energy production," flood control, fish and wildlife, recreation, agriculture, and water quality. The Agency thus believed it had authority to issue revenue bonds for projects with the single purpose of energy production. Citing Idaho Public Utilities Commission v. V-1 Oil (1966), the AG noted that an executive or administrative construction is entitled to great weight and will be followed unless cogent reasons require otherwise. Here there were no such reasons.

Constitutional permissibility was already settled

The AG also flagged the question of whether issuing revenue bonds was constitutionally permissible at all. The Idaho Supreme Court had already addressed it in Idaho Water Resource Board v. Kramer, 97 Idaho 535, 548 P.2d 35 (1976), holding that the issuance of revenue bonds by the Board was constitutionally permissible. The AG saw no need to revisit Kramer.

Common questions

Did the AG read the Board's authority as unlimited?

No. The opinion was tied to the specific question presented: whether the Board could issue revenue bonds to fund a hydroelectric project with no irrigation or other water-development benefits. The AG concluded yes within the framework of § 42-1734(x), the constitutional power to generate and wholesale hydroelectric power, and the agency's own Rule 2.3.

What was the role of the State Water Plan?

Rule 2.3 made conformance with the State Water Plan adopted under Article 15, § 7 a condition of eligibility. A project that did not conform to the plan would not be eligible for revenue bond financing under the rule, even if otherwise authorized.

Did the AG decide whether the Board should fund any particular project?

No. The opinion addressed only the legal question of authority, not the merits of any specific project. The AG noted that revenue bonds are issued without state obligation and are repaid from project revenues, leaving the financial judgment to the Board.

Was the Board the same thing as the Department of Water Resources?

The AG was careful to distinguish them. § 42-1732 established the Board as the constitutional agency within the Department, with its own constitutional and legislative existence and duties. The Board operates within the Department but is not the Department.

Citations

• Idaho Const. art. 15, § 7 — created the Water Resource Agency and granted authority to generate and wholesale hydroelectric power at the site of production.
• Idaho Code § 42-1731 — declared the Board's mission of conservation, development, and optimum use of water resources.
• Idaho Code § 42-1732 — established the Board within the Department of Water Resources.
• Idaho Code § 42-1734(s) — separately authorized revenue bonds for irrigation rehabilitation "and for water projects."
• Idaho Code § 42-1734(x) — authorized the Board to loan revenue bond proceeds to local water project sponsors.
• Idaho Code § 42-1751(d) — defined "project" for purposes of the revolving development fund.
• Idaho Water Resource Agency Rule 2.3 (April 15, 1983) — defined "eligible project" to include energy production.
• Idaho Water Resource Board v. Kramer, 97 Idaho 535 (1976) — Idaho Supreme Court held that the Board's issuance of revenue bonds was constitutionally permissible.

Source

• Landing page: https://www.ag.idaho.gov/office-resources/opinions/
• Original PDF: https://ag.idaho.gov/content/uploads/2018/04/OP85-02.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

STATE OF IDAHO
OFFICE OF THE ATTORNEY GENERAL
BOISE 83720

GENERAL OPINION NO. 85-2

TO: A. Kenneth Dunn, Director
Department of Water Resources
Statehouse Mail

Per Request for Attorney General's Opinion

QUESTION PRESENTED:

Does the Idaho Water Resource Board have the authority to issue revenue bonds for the purpose of loaning the proceeds to a local water project sponsor to construct a hydroelectric power project which serves no other water development, usage or conservation purposes?

CONCLUSION:

Yes. The Idaho Water Resource Board has the authority to issue revenue bonds for the purpose stated in the question presented. Idaho Code § 42-1734(x) authorizes the board to issue the proceeds of the sale of revenue bonds to local water project sponsors. Since there is no statutory language evidencing a contrary intent, the term "water project" must be construed to encompass purely hydroelectric power projects.

ANALYSIS:

The Idaho Resource Board was established pursuant to the provisions of article 15, section 7, of the Constitution of the State of Idaho. Idaho Code section 42-1732 establishes the board as the constitutional agency within the department of water resources. Thus, the board, while operating within the department of water resources, has its own constitutional and legislative existence and duties. Idaho Code § 42-1734(x) authorizes the board to issue revenue bonds:

To loan, without prior legislative approval, the proceeds of the sale of revenue bonds to the local water project sponsor or sponsors; to enter into lease, sale or loan agreement; and to purchase all or a portion of, or participate in, loans, originated by private lending institutions.

The determinative question is whether the term "water projects" encompasses a hydroelectric project that has no irrigation benefits. The legislature did not include a definition of "water project" in the act now in question and legislative history concerning the act is scant and inconclusive. Furthermore, research reveals no case law that would be helpful in the matter. Therefore, it is necessary to glean the meaning of the words, applying well-recognized rules of statutory construction.

In construing statutes the Idaho Supreme Court has enunciated the following principles:

In the absence of some manifestation to the contrary we must assume the legislature intended the ordinary import of the words it used. Nicolaus v. Bodine, 92 Idaho 639, 641, 448 P.2d 645, 647 (1968).

When the language used in a statute has a definite, clear meaning and applies to a certain case, the courts must give effect to that meaning whether or not the individuals comprising the legislature anticipated the result. Unity Light & Power Company v. City of Burley, 83 Idaho 285, 289, 361 P.2d 788, 790 (1961).

In construing a statute, it is the duty of this court to ascertain the legislative intent, and give effect thereto. In ascertaining this intent, not only must the literal wording of the statute be examined, but also account must be taken of other matters, "such as the context, the object in view, the evils to be remedied, the history of the times and of the legislation upon the same subject, public policy, contemporaneous construction, and the like." Messenger v. Burns, 86 Idaho 26, 29-30, 382 P.2d 913, 915.

The most fundamental premise underlying judicial review of the legislature's enactments is that, unless the result is patently absurd, the courts must assume that the legislature meant what it said. Where a statute is clear and unambiguous the expressed intent of the legislature must be given effect. State, Department of Law v. One 1955 Willys, 100 Idaho 150, 153, 595 P.2d 299, 302 (1979).

A statute is to be construed in consideration of the reason for the statute, its object and purpose and thereby ascertain and render effective the legislative intent. State v. Hoch, 102 Idaho 351, 352, 630 P.2d 143, 144 (1981).

Examining the act in question with the above quoted principles in mind mandates a conclusion that the board has the authority to issue revenue bonds for the purpose of loaning the proceeds to a local water project sponsor of a hydroelectric project.

Article 15, section 7, of the Constitution of the State of Idaho vests the Water Resource Agency with certain enumerated powers. It reads as follows:

There shall be constituted a Water Resource Agency, composed as the Legislature may now or hereafter prescribe, which shall have power to formulate and implement a state water plan for optimum development of water resources in the public interest; to construct and operate water projects; to issue bonds, without state obligation, to be repaid from revenues of projects; to generate and wholesale hydroelectric power at the site of production; to appropriate public waters as trustee for Agency projects; to acquire, transfer and encumber title to real property for water projects and to have control and administrative authority over state lands required for water projects; all under such laws as may be prescribed by the Legislature.

The above quoted amendment to the state constitution, passed in 1964, charges the agency with the responsibility to "implement a state water plan for optimum development of water resources in the public interest." (Emphasis added.) Such a plan must include both the most efficient utilization of hydroelectric power, and also the most efficient method of generating hydroelectric power.

Article 15, section 7, also authorizes the Water Resource Agency "to generate and wholesale hydroelectric power at the site of production." This authority is not limited to hydroelectric power projects with associated irrigation benefits. It would appear incongruous, absent a specific prohibitionary provision, if the board's parallel authority to participate in the indirect financing of local hydroelectric power through revenue bonds was limited to projects with irrigation benefits.

Idaho Code § 42-1731 reads as follows:

The welfare of the people of this state is dependent upon conservation, development and optimum use of our water resources. To achieve this objective and protect the waters of Idaho from diversion out of state, it is essential that a coordinated, integrated, multiple use water resource policy be formulated and a plan developed to activate this policy as rapidly as possible. It is in the public interest that these functions be carried out by a single state agency.

The issuance of revenue bonds for local hydroelectric projects conforms to this declaration of intent. The issuance of said bonds will enable the state to develop the optimum use of its water resources and protect the waters of Idaho from diversion out of state.

Idaho Code § 42-1734(s) also gives some guidance to this question. It states in pertinent part that the agency is empowered to "issue revenue bonds for the rehabilitation and repair of existing irrigation projects and irrigation facilities, and for water projects, . . ." (Emphasis added.) If the term "water project" was intended to mean only irrigation projects, the above quoted language would be superfluous.

Although no definition of "water project" exists within the act in question, the term is defined for purposes of the code sections concerning the revolving development fund. Idaho Code § 42-1751(d) states:

"Project" means any project by means of which water should be utilized or benefits accrue within this state for purposes within the limitations of this act.

Obviously, any hydroelectric project would have to utilize water within this state and, if found worthy of revenue bond support by the board, would be for purposes within the limitations of this act.

On April 15, 1983, the Water Resource Agency adopted rules and regulations in order to administer the revenue bond program. Rule 2.3 defines an eligible program as follows:

"Eligible project" means a project in Idaho in conformance with the State Water Plan developed pursuant to Article 15, Section 7, Idaho Constitution, which has been approved for financing by an eligible financial institution. Projects may include but are not limited to the drainage or irrigation of agricultural property, the provision of domestic and municipal water supplies, energy production, flood control, fish and wildlife, recreation, agriculture, or water quality. Projects with multiple water uses are encouraged, however, secondary water uses that could be included in a multipurpose project shall be consistent with the primary purpose.

Thus, while priority is given to "projects with multiple water uses," the agency believes it has the authority to issue revenue bonds for projects with the single purpose of energy production. Although the agency's interpretation is by no means controlling, it should be given deference:

A construction given a statute by executive or administrative officers of the state is entitled to great weight and will be followed by the courts unless there are cogent reasons for holding otherwise. Idaho Public Utilities Commission v. V-1 Oil, 90 Idaho 415, 420, 412 P.2d 581, 583.

In the instant case there are no cogent reasons for holding otherwise. The authority to issue revenue bonds is consistent with the broad powers and duties given to the Water Resource Agency by the state constitution and legislative enactment.

Besides deciding whether the board has the authority to issue said bonds, it must also be determined whether the issuance of revenue bonds is constitutionally permissible. However, examination of the issue in detail in this opinion is not necessary. The Idaho Supreme Court has already decided that the issuance of revenue bonds is constitutionally permissible. Idaho Water Resource Board v. Kramer, 97 Idaho 535, 548 P.2d 35 (1976). The issuance of revenue bonds for hydroelectric projects is authorized by statute and constitutionally permissible.

SUMMARY:

Idaho Code § 42-1734(x) authorizes the board to issue revenue bonds to a local water project sponsor. The term "water project" is not defined. However, the act in question manifests no legislative intent to exclude purely hydroelectric projects from within the definition. It is statutorily authorized and constitutionally permissible for the Idaho Water Resource Board to issue revenue bonds to a local water project sponsor to construct a hydroelectric power project which serves no other water development, usage or conservation purpose.

AUTHORITIES CONSIDERED:

1. Idaho Constitution
   Art. 15, § 7.

2. Idaho Code
   Sections 42-1731, 42-1732, 42-1734(s), 42-1734(x), 42-1751(d).

3. Idaho Cases
   a. Unity Light & Power Company v. City of Burley, 83 Idaho 285, 289, 361 P.2d 788, 790 (1961).
   b. Messenger v. Burns, 86 Idaho 26, 29-30, 382 P.2d 913, 915 (1963).
   c. Idaho Public Utilities Commission v. V-1 Oil, 90 Idaho 415, 420, 412 P.2d 581, 583.
   d. Nicolaus v. Bodine, 92 Idaho 639, 641, 448 P.2d 645, 647 (1968).
   e. Idaho Water Resource Board v. Kramer, 97 Idaho 535, 548 P.2d 35 (1976).
   f. State, Department of Law v. One 1955 Willys, 100 Idaho 150, 153, 595 P.2d 299, 302 (1979).
   g. State v. Hoch, 102 Idaho 351, 352, 630 P.2d 143, 144 (1981).

4. Other Authorities
   Idaho Water Resource Agency Rules and Regulations, Rule 2.3 (April 15, 1983).

DATED this 31st day of May, 1985.
ATTORNEY GENERAL
Idaho

ANALYSIS BY:
STEVEN L. ADDINGTON
Deputy Attorney General
Natural Resources Division