What kind of entity is Idaho's Water District 1 (the big Snake River district managed by the Committee of Nine), and who controls the water-bank money it collects?
Plain-English summary
The Legislative Auditor was wrapping up a multi-year audit of Water District 1 (the Snake River district that distributes water to about 1.3 million acres of farmland between the Wyoming border and Milner Dam) and asked four questions about how the district works as a legal entity.
What is Water District 1? It is an instrumentality of the state, created by the Director of the Department of Water Resources under Idaho Code § 42-604 to help the Department carry out its statutory duty (§ 42-602) to distribute the public waters of the state in accordance with the prior-appropriation doctrine. Water districts are administrative and geographic units that exist continuously from creation until dissolved by the Director.
Who runs the district? The water users elect a chairman and secretary at the annual meeting (Idaho Code § 42-605) and elect a watermaster who handles the daily business of distributing water and preparing the budget. Water District 1 has been active year-round since 1919.
How are funds handled? Idaho law gives the district four options for collection and disbursement (some involve the county auditor and county treasurer; others involve the watermaster collecting and a district treasurer holding the funds under Idaho Code § 42-619). Critically, the watermaster cannot also serve as district treasurer. Those two offices are incompatible at common law because the treasurer's job includes oversight over the watermaster's expenditures. Water District 1's then-current practice of having the watermaster also act as treasurer is not permissible.
Who controls water-bank funds? Water District 1, not the Committee of Nine. Idaho Code § 42-1765 lets the Idaho Water Resource Board appoint local committees (here, the Committee of Nine) to facilitate the rental of stored water in the district's rental pool, but the statute gives the local committee no authority over collection, investment, or disbursement of water-bank funds. Idaho Code § 42-613A places those funds under the "exclusive control of the water district" and limits their use to expenses, improvements, education, and other public projects related to water distribution. They cannot be paid back to water users or used to reduce assessments.
Can the watermaster invest the funds in stocks or bonds? No, on two grounds. First, the watermaster cannot lawfully hold the funds (the district treasurer does). Second, the district treasurer is required to comply with the Public Depository Law (chapter 1, title 57, Idaho Code), which limits investments to designated depositories and to the obligation-type securities authorized by Idaho Code § 67-1210. Common stocks, corporate bonds, and mutual funds are not on that list.
Currency note
This opinion was issued in 1991. 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
Idaho's water districts trace to the Act of March 11, 1903 (1903 Idaho Sess. Laws 223). The legislature directed the Department of Water Resources (then known as the State Engineer) to organize districts for each public stream and its tributaries where the relative dates of priority of appropriation had been determined by court decree. By 1991 there were 108 such districts, of which 84 were active.
Water District 1 itself dates to 1919. It encompasses the Snake River from the Wyoming border to Milner diversion dam near Twin Falls, an unusually large district by national standards. The Committee of Nine was formed at the same time as a year-round executive body to provide organizational continuity (the spring-summer-fall irrigation cycle requires steady administrative work, and the geographic scale required structured representation across the storage and natural-flow water users along roughly 300 miles of river).
The fund-handling statutes have evolved in three distinct layers. The original 1903 act used county officials as fiscal agents. A 1947 amendment (now § 42-618) let multi-county districts authorize the watermaster to collect assessments directly. A 1989 amendment (§ 42-619) added an alternative under which the water users elect or appoint a district treasurer to hold and disburse funds and comply with the Public Depository Law. The four lawful combinations of collection-and-disbursement options the AG identifies come from reading these three layers together.
The water supply bank statutes (Idaho Code §§ 42-1761 to 42-1766) date to 1979, when the legislature provided a statutory basis for the rental-pool operation that had operated informally since the 1930s. The Idaho Water Resource Board adopted implementing rules (IDAPA 37.D) in 1980 and amended them in 1991. Section 42-613A, added in 1986, requires that any proceeds retained by a district from rental-pool operation be used "exclusively for public purposes" and lists the four allowable categories.
The incompatibility-of-offices doctrine (cited from People ex rel. Chapman v. Rapsey (Cal. 1940) and Township of Belleville v. Fornarotto (N.J. Super. 1988), and 63A Am. Jur. 2d Public Officers and Employees § 65) is the common-law principle that prevents one person from holding two offices when one has fiscal accounting authority over the other. The AG concluded that the Idaho Supreme Court would adopt the doctrine because Idaho Code § 73-116 incorporates the common law as the rule of decision and because the underlying policy concern (protecting public monies from improper use) applies equally in Idaho.
Common questions
Could the watermaster's salary really not be paid out of district funds by the watermaster himself?
The AG concluded no. Idaho Code § 42-611 (in effect when the opinion was written, repealed in 1989) required the watermaster to present a bill for services to the board of county commissioners; the board then ordered a warrant. § 42-619 created the alternative of paying through a district treasurer. Either way, the watermaster cannot be the one writing his own check.
What did the agreement between IDWR and the Committee of Nine actually do?
Under a March 1979 agreement, the watermaster of Water District 1 transmits the assessments he collects to IDWR; IDWR then issues paychecks to the watermaster and his assistants. The AG noted this practice undermined any argument that the watermaster needed to receive his compensation "directly" without intervening parties.
What's the practical fix?
The AG recommended that Water District 1 elect or appoint a separate district treasurer to take custody of the funds, rather than continuing to let the watermaster serve in both roles. The next annual meeting (March 1992) would be the natural time, but the AG suggested making the change earlier given the audit issues identified.
What about the 10% surcharge on rented water?
That goes to IDWR as reimbursement for the agency's costs of operating the water supply bank (IDAPA 37.D.6.2; Idaho Code §§ 42-1752 and 42-1760). The remainder retained by the district is what is constrained by § 42-613A.
Can the district treasurer at least put the funds in a high-yield account?
Within the limits of the Public Depository Law. The treasurer must use a designated depository, which is typically a national bank, state bank, trust company, federal savings and loan, state savings and loan, federal credit union, or state credit union located in Idaho. Surplus or idle funds can be invested under § 67-1210, but only in obligation-type securities, not equities.
Citations
Idaho statutes: § 42-602 (IDWR duty to distribute public waters); § 42-604 (creation of water districts); § 42-605 (annual meeting and election of officers and watermaster); § 42-606 to 42-608 (watermaster duties and year-round service); § 42-611, 42-612, 42-613, 42-613A, 42-614 to 42-617 (budget, collection, disbursement, retained rental-pool proceeds); § 42-618 (alternative procedure for watermaster collection); § 42-619 (district treasurer alternative, 1989); § 42-1752, 42-1760 (surcharge revenue accounts); § 42-1761 to 42-1766 (water supply bank); § 57-105, 57-110, 57-127, 57-128, 57-130 (Public Depository Law); § 67-1210 (state treasurer's authorized investments); § 67-5204 (rule-effectiveness procedure); § 73-116 (common law as rule of decision).
Cases: Bailey v. Idaho Irrigation Co., 39 Idaho 354, 227 P. 1055 (1924) (Idaho Supreme Court; watermaster as ministerial officer not user agent); Big Wood Canal Co. v. Chapman, 45 Idaho 380, 263 P. 45 (1927) (Idaho Supreme Court; watermaster as public administrative officer); Kopp v. State, 100 Idaho 160, 595 P.2d 309 (1979); Ottesen on Behalf of Edwards v. Board of Comm'rs of Madison County, 107 Idaho 1099, 695 P.2d 1238 (1985); Oversmith v. Highway Dist. No. 2, 37 Idaho 752, 218 P. 361 (1923); State ex rel. Evans v. Click, 102 Idaho 443, 631 P.2d 614 (1981); People ex rel. Chapman v. Rapsey, 16 Cal. 2d 636, 107 P.2d 388 (1940); Township of Belleville v. Fornarotto, 228 N.J. Super. 412, 549 A.2d 1257 (1988).
Other authorities: 63A Am. Jur. 2d Public Officers and Employees § 65 (1984); IDAPA 37.D Water Supply Bank Rules and Regulations; Rule 4.3 of Water District 1 Rental Pool Procedures (approved May 29, 1991); 1919 Annual Report for Water District No. 36.
Source
- Landing page: https://www.ag.idaho.gov/office-resources/opinions/
- Original PDF: https://ag.idaho.gov/content/uploads/2018/04/OP91-07.pdf
Original opinion text
Best-effort transcription from a scanned PDF. Minor errors may remain, the linked PDF is authoritative.
ATTORNEY GENERAL OPINION NO. 91-7
TO:
Bruce Balderston, CPA
Legislative Auditor
Statehouse
Boise, Idaho 83720-1000
Per Request for Attorney General's Opinion
QUESTIONS PRESENTED:
- Define: (a) the nature of Water District 1, (b) its term of existence, and (c) the existence of officers capable of transacting business for the district.
- Does Water District 1 have responsibility and control over all water bank funds and if so, are these funds subject to the same requirements imposed on other district funds?
- Does the Committee of Nine, which is the advisory committee for Water District 1, have any control over the use and distribution of any retained water bank funds?
- Does the watermaster for Water District 1 have authority to invest regular water district funds or water bank funds in common stocks, corporate bonds, mutual funds and other types of equity securities?
CONCLUSIONS:
- (a) Water District 1 is an instrumentality of the state established by a predecessor of the Director of the Department of Water Resources, pursuant to Idaho Code § 42-604, for the purpose of assisting the Department in carrying out its responsibility to distribute the public waters of the state in accordance with the rights of prior appropriation. (b) The term of existence of Water District 1 as an administrative and geographic unit is continuous from its date of creation until dissolved by order of the Director. Water District 1 is active year-round. (c) The current officers of Water District 1 are the chairman and secretary whose primary duties are (1) presiding over the annual meeting of the district, (2) transmitting a certified copy of the budget to the Idaho Department of Water Resources (IDWR) and the county auditor in some circumstances, and (3) preparing, maintaining and transmitting the minutes of the meeting to the IDWR. The daily business activities of the district are transacted by a watermaster elected by the water users and appointed by the Director. The watermaster of Water District 1 presently serves as treasurer.
Idaho law provides four alternative methods for the collection and disbursement of water district funds: (1) the county auditor and treasurer may collect and disburse the assessments; (2) the county auditor and treasurer may collect the assessments, and the water district treasurer may hold and disburse the water district funds; (3) the watermaster may collect the assessments, and the county treasurer may hold and disburse the assessments; (4) the watermaster may collect the funds, and the water district treasurer may hold and disburse the assessments. Idaho law does not permit the watermaster to act as treasurer for a water district. Thus, Water District 1's present practice of allowing the watermaster to also serve as treasurer is not permissible.
-
Water District 1 has responsibility and control over water bank funds associated with the operation of the Upper Snake Rental Pool. The funds are of two types: monies held for the benefit of persons leasing water into the rental pool, and monies assessed by the district as an administrative charge on water rented from the Upper Snake Rental Pool. New rules provide that the district must assess a 10% surcharge which is transferred to the IDWR as reimbursement for its costs. The district retains the remainder of any assessment. Water bank funds must be handled in the same manner as other district funds, but must be maintained in a separate bank account. Water bank funds retained by the district can only be used to pay for the district expenses, improvements and projects authorized by Idaho Code § 42-613A and must not be paid to water users or used to reduce assessments to water users.
-
Idaho Code § 42-1765 does not vest in the local committee of a water district, here the Committee of Nine, any responsibilities regarding the collection, investment, or disbursement of water bank funds. The water district retains authority over water bank funds.
-
The watermaster of Water District 1 should not have custody of the funds of Water District 1. Assuming Water District 1 has elected to follow Idaho Code § 42-619, a district treasurer should be elected to have custody of Water District 1 funds and to make disbursements from these funds. The district treasurer is prohibited by the provisions of the Public Depository Law, chapter 1, Title 57, Idaho Code, from investing any district funds in common stocks, corporate bonds, mutual funds and other types of equity securities.
[The full analysis develops each conclusion at length, including detailed treatment of the legislative history of Idaho's water district statutes, the common-law incompatibility of offices doctrine, the operation of the water supply bank under Idaho Code §§ 42-1761 to 1766, and the requirements of the Public Depository Law. The complete original text is available at the linked PDF above.]
DATED this 5th day of August, 1991.
LARRY ECHOHAWK
Attorney General
State of Idaho
Analysis By:
David J. Barber, Deputy Attorney General, Natural Resources Division
Phillip J. Rassier, Deputy Attorney General, Idaho Department of Water Resources