20071003Vol III Oral Argument, Hearing.pdf

ORIGINAL
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF UNITED WATER IDAHO INC. TO
AMEND AND REVISE CERTIFICATE OF
CONVENIENCE AND NECESSITY NO. 143
) CASE NO. UWI-W-07-
BEFORE
COMMISSIONER MARSHA SMITH (Presiding)
COMMISSIONER MACK A. REDFORD
COMMISSIONER PAUL KJELLANDER
i..
PLACE:Commission Hearing Room
472 West Washington
Boise, Idaho
DATE:September 24 , 2007
VOLUME III - Pages 14 - 144
CSB REPORTING
Constance S. Bucy, CSR No. 187
23876 Applewod Way * Wilder, Idaho 83676
[phone] * [phone]
Email csb~heritagewifi.com
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For the Staff:Scott Woodbury, Esq.
Deputy Attorney General
472 West Washington
Boise, Idaho 83720-0074
For United Water Idaho:McDEVITT & MILLER
by Dean J. Miller , Esq.
420 West Bannock StreetBoise, Idaho 83702
For the City of Eagle:MOORE SMITH BUXTON & TURCKE
by Bruce M. Smith , Esq.
and Susan E. Buxton , Esq.
950 West Bannock , Suite 520Boise, Idaho 83702
For Capital Development,
Inc. :
MOFFATT THOMAS BARRET ROCK
& FIELDS
by Robert B. Burns , Esq.
101 South Capitol Blvd.
10th FloorBoise, Idaho 83702
CSB REPORTING
Wilder, Idaho
APPEARANCES
83676
WITNESS EXAMINATION BY
Mr. Miller (Direct)
Prefiled Direct Testimony
Prefiled Rebuttal Testimony
Mr. Woodbury (Cross)Mr. Smith (Cross)
Mr. Miller (Redirect)
Mr. Miller (Direct)
Prefiled Direct Testimony
Prefiled Rebuttal Testimony
Pre filed Supp. Testimony
Mr. Woodbury (Cross)Mr. Smith (Cross)
Mr. Miller (Redirect)
Mr. Burns (Direct)
PAGE
103
118
123
129
135
139
Gregory P. Wyatt
(United Water Idaho)
Scott Rhead
(United Water Idaho)
J. Ramon Yorgason
(Capi tal Development)
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Wilder, Idaho 83676
INDEX
NUMBER DESCRIPTION PAGE
FOR UNITED WATER IDAHO INC.
1 - Letter from J. Ramon Yorgason to
John Lee, United Water , 12/21/06
Premarked
2 - Map of United Water s proposed
certificate expansion
Premarked
3 - Lanewood Estates Expansion Premarked
4 - Protestants I Technical Comments,
etc.Premarked
5 - Preliminary Order , IDWR Premarked
FOR CAPITAL DEVELOPMENT, INC.
311 - Water Supply Bank Rental
Agreement
Identified
317 - E-mail from Dave Yorgason to
Bob Burns, 9/24/2007
Identified
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EXHIBITS
83676
BOISE, IDAHO, MONDAY , SEPTEMBER 24,2007,9:30 A. M.
COMMISSIONER SMITH:Good morning, ladies
and gentlemen.This is the time and place set for an
oral argument before the Idaho Public Utili ties
Commission, Case No. UWI-W-07-02, further identified as
in the matter of the application of United Water Idaho,
Inc. to amend and revise certificate of convenience and
necessity No. 143.ll begin by, I guess, introducing
ourselves.Everyone should know us.Marsha Smith.
m Chairing today I s hearing.On my left is Paul
Kj ellander , the President of the Commission, and on my
right is Mack Redford and the three of us comprise the
Public Utilities Commission.
ll take the appearances of the parties
next.Mr. Miller.
MR. MILLER:Thank you, Madam Chairman,
Members of the Commission.Dean J. Miller of the firm
McDevi tt & Miller on behalf of the applicant.With me
this morning are Mr. Wyatt and Mr. Rhead , the Company '
wi tnesses and the Company is prepared to proceed to
hearing.
COMMISSIONER SMITH:Thank you,
Mr. Miller, and we have Mr. Burns.
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MR. BURNS:Yes, I'm Robert Burns.
wi th the law firm of Moffatt, Thomas, Barrett, Rock
Fields.I represent intervenor Capital Development, Inc.
and with me today is J. Ramon Yorgason who is the
president of Capital Development and we, too, are ready
to proceed at this time to hearing.
COMMISSIONER SMITH:Thank you, and
Mr. Smith or Ms. Buxton.
MR. SMITH:Good morning, Madam Chairman.
Bruce Smith , Moore, Smith , Buxton & Turcke on behalf of
the City of Eagle.
COMMISSIONER SMITH:Thank you.
MS. BUXTON:Susan Buxton , also.
COMMISSIONER SMITH:Thank you.I guess
the first order of business today is to take oral
arguments on the motion of the City of Eagle to vacate
the hearing.Is that everyone s understanding?Yes?
Oh, I'm sorry, Mr. Woodbury.
MR. WOODBURY:Scott Woodbury, Deputy
Attorney General, for the Commission Staff.
COMMISSIONER SMITH:And Mr. Woodbury,
will the Staff be participating in the oral argument?
MR. WOODBURY:No, it won
COMMISSIONER SMITH:Thank you.With
that, we ll begin with Mr. Smith or Ms. Buxton.
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MR. SMITH:Ms. Buxton is going to handle
this.
MS. BUXTON:m sorry, I didn t know you
wanted me to do that.I would have done that.
MR. SMITH:Madam Chairman , the City of
Eagle has requested that the hearing date be vacated.
the end of our or actually at the hearing in May of last
year , we had agreed to a stay.The City of Eagle and the
developer, Capital Development, had reached agreement the
evening before the hearing and that they have a written
contract that provides that the City of Eagle will be the
water purveyor for this development.
I believe that agreement has been -- well
it has been filed with the Commission.That agreement
required Capital Development to do certain things.
required the City of Eagle to do them as well.The
agreement provided for a process by which the City of
Eagle would provide water to the development.It is the
City of Eagle s intent to provide water to them.We have
made arrangements for that, to provide water to them or
the water rights available to that development
immediately and we don t see that there is any need for
this hearing today.
There has been discussions between Capital
Development and the City of Eagle over implementation of
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that agreement and the City is prepared to fulfill its
obligations under the agreement.We do not believe that
Capi tal Development has, but we represent to the
Commission today that the City of Eagle has the water
rights necessary to serve this development according to
the schedule they ve presented and we are prepared to ask
that the hearing be vacated on that basis because that
the agreement between the City of Eagle and Capital
Development.We have done everything that was required
under that agreement and we would ask the Commission to
vacate this hearing because of that agreement.
Secondly, if you do not agree to vacate
the proceeding, we would ask for a continuance of at
least 45 days so that we can pursue discovery.What the
City of Eagle believes has happened is after that
agreement was entered into that there were efforts by the
developer and United Water Idaho to make arrangements for
Uni ted Water to serve the development in contradiction of
the agreement that we have with them.
Now , there has been additional testimony
filed by Capital Development and United Water both
indicating that there was no collusion or other effort by
them.The City would like to entertain or would like to
be availed the opportunity to undertake discovery with
regard to these facts.This City has this agreement.
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resolved all the issues before the previous hearing and
ve done everything that we can to implement it.
prepared to serve the development as soon as they need
water, so we don t see a need for this hearing today and
if you intend to proceed with this case, though, we would
ask that you continue it to allow us to undertake some
addi tional discovery.Thank you.
COMMISSIONER SMITH:Are there any
questions for Mr. Smith?
COMMISSIONER REDFORD:No.
COMMISS lONER SMITH:Do you have any
questions?
COMMISSIONER KJELLANDER:No.
MR. SMITH:Madam Chairman, one
follow-up.
COMMISSIONER SMITH:Yes, certainly.
MR. SMITH:The issue of enforcement of
that agreement is a matter that the City took up last
week and I wish to inform the Commission that the City of
Eagle filed suit against the developer last Friday to ask
for a specific performance of that agreement.Among the
remedies requested in that complaint, in that lawsuit , is
that they inform the Commission that the City will be
providing water and that they are precluded from
accepting service from United Water.The agreement that
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the City reached was that the City would withdraw its
obj ections to the applications pending of the county and
the City did that immediately upon execution of the
agreement.What the City feels has not happened is that
Capi tal Development has not followed through on its end
of that agreement; hence, that's the cause for filing of
the suit, and we believe that this hearing and this
matter before the Commission is inconsistent and in
direct contradiction of that agreement , so we wish to
inform you of the fact that that suit has been filed and
the types of relief that are requested under that, and we
have copies of the complaint available for the
Commission.
COMMISSIONER SMITH:Thank you , Mr. Smi th.
I believe President Kj ellander has a question.
COMMISSIONER KJELLANDER:Just a quick
question , Mr. Smith.Wi th regards to the ability to
serve and the water necessary for that, did the City go
and acquire a new water right or how does the City intend
to serve the developer under the agreement that was
signed?
MR. SMITH:Thank you, Commissioner.
You ll recall at the hearing in or at the initiation of
the hearing in May, the City has pending applications
wi th the Department of Water Resources for about nine cfs
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of water and that is a part of a water right or part of
those water rights would be anticipated to serve this
development; however, the department has not issued its
final decision.There were some issues raised with the
department.The department has assured us that the
decision is imminent.Now , when you take something under
advisement and you issue an opinion that's imminent, I
mean, you know we re at the behest of the Department of
Water Resources on issuing that.
What the City did in the meantime is we
have existing water rights already permitted for certain
service areas wi thin the City.The City went to the
Department of Water Resources and secured authorization
from the department to use a portion of those water
rights from the well that will serve the Lanewood
development, so the department has authori zed us to take
our existing water rights , not contested, not pending or
anything else , existing water rights, and use in this
well that we anticipate the pending applications will
also use, so as of today, we have authorization, we
have
--
the water right is 63-12448.
It is more than adequate as a water right
to serve this development in its entirety and we have
authorization from the Department of Water Resources to
use that well and to use that water right to serve this
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development, so there is no question about the
authorization or the authority to use the water right to
serve them and what the department has assured us -- this
lS as part of a lease program that the Department of
Water Resources runs and it enables us to basically do
what we were able to do with this one, so we have this
water right, we can divert it from that well and we can
serve Lanewood with it and the Department of Water
Resources was fully aware of all these facts when they
authorized it.
The relation between that authorization
and the pending applications that was the subj ect of some
discussion and is part of the supplemental testimony
filed by Capital Development, and I think United Water
Idaho as well, is that it is a lease that is designed to
take -- to bridge the gap in between resolution of any
issues that might come out of that determination and the
department has told us that this lease is good for
until resolution of all those issues, so we have
authorization, we ve got the water right, we re doing the
well and we re ready to serve consistent with what we
obligated ourselves to do under the agreement.
COMMISSIONER KJELLANDER:So let me make
sure I understand, so if this development were up in
days, they could have water from you in 60 days?
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MR. SMITH:Absolutely.
COMMISSIONER KJELLANDER:Okay, thank you.
COMMISSIONER REDFORD:I have one
question.What's your authority to serve outside your
Ci ty limits?
What you is our authority?MR. SMITH:
have contractual authority.We have the fact that this
is wi thin the area of impact of the City of Eagle.
COMMISSIONER REDFORD:Is that codified
that you can serve in your area of impact?
MR. SMITH:ll let Ms. Buxton address
that specifically.
MS. BUXTON:Ti tle 50, Chapter 3, Idaho
Code allows us a city to contract for services and also
allows a city to establish water services that they can
extend outside of their city limits, and also if you look
at Title 50-222 with regard to annexation, it
contemplates that where the city has actually extended
services outside of their city limits, the area of impact
is not an issue, it's really outside of the territorial
limi ts, that they can then be deemed consenting to annex
into the city limits.
Have you done thisCOMMISSIONER REDFORD:
before with other developments?
Yes, sir.MS. BUXTON:
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COMMISSIONER REDFORD:Which developments
were they?
MS. BUXTON:As the Commission may or may
not know , our firm acts as the general counsel for over
23 cities in this state and with regard to those cities,
many of them have extended sewer and water systems that
are owned by the city limits either upon request or --
and there actually is case law where the Idaho Supreme
Court has required the city to actually extend the
service.
COMMISSIONER REDFORD:That's Title 50,
what again?
MS. BUXTON:Excuse me?
COMMISSIONER REDFORD:Title 50?
MS. BUXTON:Title 50, Chapter
COMMISSIONER REDFORD:Okay, thank you.
COMMISSIONER SMITH:Commissioner
Kj ellander.
COMMISSIONER KJELLANDER:Just a
follow-up.Ms. Buxton, in your experience with the other
ci ties that you represent and the title sections that you
referenced, is the agreement that you believe you have in
place now with the developer sufficient to meet the
statutory test that's been laid out?
MS. BUXTON:Absolutely, Commissioner.
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Wi th regard to this agreement, this agreement actually
says that we agree to serve, they asked us to serve and
we agree to annex.We also agreed to waive any of our
rights to contest or otherwise protest the type of
development that is
--
and this is going into the area of
impact, so I don t want to confuse the issue, but the
Ci ty has an ability under a contract and ordinances that
were negotiated with Ada County that Ada County would
apply the City s comprehensive plan wi thin the existing
area of impact and in that situation there was question
and the ability for the City to go in and ask that the
county be interpreting the application filed by Lanewood
for a subdivision and for additional development rights
there and the City waived that opportunity to do that as
would have been allowed by agreement with the county and
by ordinances entered into by the county that applied the
Ci ty ' s comprehensive plan and parts of its subdivision
and zoning ordinance.
COMMISSIONER KJELLANDER:Okay.
COMMISSIONER SMITH:Mr. Burns.
We didn t know forMR. BURNS:Thank you.
sure when we came in today how the City of Eagle was
going to argue that it might serve water.ve been
asking for a long time now for evidence of the
methodology that the City would utilize in order to
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acquire water rights to provide water service to Lanewood
Estates , so I had a paralegal do some research last week
to see if there were any water rights that could be
pulled up off the public records of the Idaho Department
of Water Resources and we ve identified the lease that I
believe Mr. Smith has now made reference to that we
been asking to be directed to for well over a month now
and I would like -- and I've marked it as an exhibit and
I think it would be helpful if I might circulate a copy
or hand out copies of this particular exhibit because
want to make several points with respect to the
appropriateness or usefulness of this particular water
right for the purposes that are at hand; that is,
providing water service to Lanewood Estates, and I also
have another exhibit that I've marked which is an
exchange of e-mail between Dave Yorgason who is an
officer with Capital Development and he s Mr. Yorgason ' s
son and Mike Reno who is a supervisor at the Central
District Health Department who talks about whether or not
the Central District Health Department would allow a
development to go forward based upon these lease rights
and says no, that leased water rights are insufficient
for the Central District Health Department to sign a plat
and for the proj ect to go forward.
When we get done today, through the
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testimony, we ll establish without a doubt that these
leased water rights that the City now at the
eleventh-and-one-half hour is pointing to to say hey, we
can perform, we can do everything that we said we can do
are absolutely inappropriate and will not work from a
legal perspective to allow my client to record a final
plat and to go forward with his proj ect, and even if he
could, the evidence will show that these leased water
rights are for a very brief period of time and subj ect
being divested long before his proj ect can be completed.
In fact, the longest they go is to December 31st of next
year , so with the Commission s approval, I'd like to hand
out these two exhibits so I can talk about them in
connection with my argument.
And the argument isCOMMISSIONER SMITH:
regarding whether or not the hearing should be vacated or
continued?
Yes, Commissioner Smith.MR. BURNS:
COMMISSIONER SMITH:Okay.
(Mr. Burns distributing documents.
Now, after handing these outMR. BURNS:
I have multiple additional copies , should I hand out
additional copies to anybody at this time besides Staff,
the parties and the three Commissioners and the recorder
reporter?
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COMMISSIONER SMITH:I don t care.
anybody wants them , there are extra copies.
(Capi tal Development, Inc. Exhibit Nos.
311 and 317 were marked for identification.
Okay, and I will come to theseMR. BURNS:
two exhibits at the end of my, towards the end of my,
argument, but let me start at the beginning and work my
way there so I have some background and foundation for
what I'm going to say about those water rights.
Mr. Smith has made clear, the City of Eagle s motion is
based on the claim that Capital Development has breached
the annexation and cooperation agreement that is attached
as Exhibit 1 to the motion of the City of Eagle to
vacate.
Now, these allegations were addressed with
some degree of specificity in Mr. Yorgason ' s supplemental
direct testimony that he filed last Monday and I would
urge or direct the Commissioners ' attention to that
testimony which I presume has already been reviewed.
Rather than going through it in detail, I'll just leave
it with that reference, but since Eagle s motion is based
on a claim that Capital Development, Inc. has breached
its contract, I'd like to review briefly what the
contract says, and if you look at Exhibit 1 to the City
of Eagle s motion, the annexation and cooperation
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agreement, let me read from it.The heart of it says:
Agreement:Now, therefore, in order to resolve their
differences on mutually advantageous terms, allow for
CDI's orderly development of the property without undue
and costly delay, and provide for United Water s service
of water to the property in the event Eagle is
unsuccessful in obtaining the water rights it requires to
service the property, the parties agree as follows:
Section No.CDI", which is Capital Development, Inc.
and Eagle will jointly request United Water and the
Idaho Public Utili ties Commission (the IPUC), to
continue the hearing of United Water s application
currently set for May 24th 2007 the first available
date occurring after August 24th,2007.
This was the first available date
occurring after August 24th, 2007 and that's the reason
re here and this agreement , I think, makes it
absolutely clear that if Eagle was not in a position to
provide water by August 24th , 2007 that we would be back
here asking this Commission to allow United Water to
provide water for the development of Lanewood Estates so
it would not be unduly delayed in the development of its
property, and all of that is incorporated in the very
first substantive provision or first two substantive
provisions of the agreement and I would direct the
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Commission Staff to it.
Based on these provisions, Capital
Development contends that it is Eagle that has breached
the contract and not Capital Development and Capital
Development argues that Eagle has breached the covenant
of good faith and fair dealing in at least two ways:
First, by Eagle acting to delay the Commission s decision
on this matter , Eagle is clearly in breach of its
obligations not to delay the proj ect from going forward.
That was the intent of this agreement and there will be
testimony given , there already was testimony given , in
the supplemental direct testimony of Mr. Yorgason
concerning that fact.
Secondly, Eagle has breached the covenant
of good faith and fair dealing by asserting it has those
water rights necessary to service Lanewood Estates when
in fact, as you ll see in just a minute, it has no such
thing.These are, I believe, false representations that
are being made in bad faith in order to delay this
proj ect from going forward as contemplated under the
agreement which specifically provided that if Eagle could
not obtain the water rights by August 24th , we would be
back here to this Commission in order to get United Water
the right so the proj ect could go forward.
Now, the question of which party is in
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breach of the agreement is a question that's going to
have to be resolved by the courts, apparently, as we just
found out today that Eagle has filed a lawsuit and there
will be a counterclaim, I can assure you, based upon the
grounds that you just heard and the parties can hash all
this out in front of a court, but the question, the
fundamental ultimate question, that it comes down to for
purposes of this Commission is whether or not Eagle
really has the water rights necessary to provide water
service to the proj ect so it won t delay the development
of the proj ect, which we now know it does not.
Now, Mr. Yorgason establishes in his
direct supplemental testimony that the proj ect has been
fully approved, it has the permits to go forward with
starting construction and he would be under construction
today if he had the water rights necessary to provide
water service to the proj ect.We have requested over and
over that the City provide us with evidence of the water
rights without getting anything until today, until
yesterday I received an e-mail from Mr. Smith indicating
that there was certain water rights the City had
obtained, but we have never received any documentation
from the City of Eagle.We had to dig these water rights
that I've marked as exhibits out and distributed them to
you, we had to dig those out of the public records
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oursel ves to find out how Eagle planned to go forward to
provide water.
This refusal to provide evidence of the
water rights is in and of itself a breach of the covenant
of good faith and fair dealing to provide reasonable
documentation and information so that my client could
understand how in the world the City of Eagle might
provide water service to his proj ect.
Now , the effect of the City s request for
a continuance or delay is discussed in Mr. Yorgason ' s
testimony before this Commission.As he s indicated, he
is paying $76,000 a month in interest currently on his
proj ect and that's going on every single month and it has
gone on.Mr. Yorgason has waited to bring his proj ect
under construction to allow the City all the way through
August 24th to get their water rights because that was
the agreement between the parties.Now he s waited
another month to today, to September 24th , and the City
still doesn t have the water rights.
The problem becomes severe, because unless
Mr. Yorgason can get his proj ect under construction so he
can get his paving done this fall before the first hard
freeze occurs, he s going to be delayed through the
entire building season , so instead of $76,000 a month
re going to be looking at several hundred thousand
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dollars of damages by delay that's incurred because he
cannot get water to his proj ect, so with all of that in
mind, let's take a look at these water rights that the
Ci ty of Eagle now , I believe, is saying provides it with
the ability to provide water service and I would ask the
Commission to take a look at Exhibit 311.
Now, again , Eagle has not provided me with
this document , so I don t know for an absolute fact that
this is the leased water rights that Mr. Smith has made
reference to, but I presume it is.It is the only one we
could find and it is a water lease.If you take a look
at it, you ll see that it was -- well , maybe two-thirds
of the way down , you can see that it was dated September
12th, week before last, by Mr. Bruce Smith.You can see
that towards the top it says this is to certify that the
Ci ty of Eagle, so we know it's a City of Eagle water
right, so now let's take a look at the terms of this
water right.
About a third of the way down, it says
summary of water rights or portions rented from the bank
and if you take a look, it says rented rate 0.80 cfs.
The evidence that we ll put on at the hearing today which
is included in fact in the record before the Commission
establishes that the water necessary to service the
projects in that area is 11 times that amount, okay, 11
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times the . 80 cfs.The evidence isIt's inadequate.
going to show that it won t meet fire flows.The
evidence is going to show that this . 80 won t meet the
housing needs.It's just simply an inadequate amount of
water.
Now, continue down to term of rental.
Term of rental says September 11th, 2007 to December 31st
The lease expires by its very term on December2008.
re talking about a housing31st of next year.
proj ect.What would you do if you were in a house and
the water turned off?Oops, the lease has expired, no
How can you go forward with a proj ect with more water.
basis of a lease that by its very terms expires at the
outside date on December 31st, 2008, but then the terms
go on and say or the date of final resolution of
contested matters associated with water permit Nos.
63-32089 and 63-32090, whichever occurs first.
Those water rights are the water rights
that the City has from the beginning said would be the
basis for providing water to Lanewood Estates.The
problem with those water rights are manifest and
manifold.Among those problems is that not only have
mul tiple protestants in the area contested the award of
those water rights, but the City of Eagle itself has
contested the terms of the grant of those water rights
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which is a preliminary grant and is subject to review
both by the hearing officer who issued the preliminary
order, and then if anybody doesn t like it, it's subj ect
to review by the director of the IDWR and then if anybody
doesn t like the result, it's subject to review by the
Supreme Court, and then if anybody doesn t like the
review , it's subj ect to motion for reconsideration there
or remanding back to any one of the levels for further
proceedings.
The City of Eagle is in the position where
it may be many months or years before it has the water
rights necessary to provide water service to the Lanewood
development and that's the reason we re here today.
think the agreement that is the annexation and
cooperation agreement made it fairly clear or very clear
that the purpose of that agreement was to give Eagle the
chance to obtain the water rights that they said and
represented that they would have not later than August
24th.
The testimony today will show that Mr.
Yorgason was told they would have it in May, then they
would have it in June, then they would have it in July,
and finally, he agreed to extend it to August 24th was
which was the absolute outside date that he believed he
could get his infrastructure in the ground this year if
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Eagle didn t get those water rights.If you take a look
at this Exhibit 311 , you see that it wasn t even applied
until September 12th , long after the August 24th
deadline.This is a last ditch , last minute effort to
try to create a fig leaf so the City of Eagle can stand
up here and make an argument that it has the water
rights, and it fails in manifest ways, so let's tal k
about one of the ways it fails, in addition to what I'
already told you about.
Take a look at Exhibit 317.This is an
exchange of e-mail between Dave Yorgason who is an
officer with Capital Development and Mike Reno who is the
head, the supervisor for Central District Health
Department.Central District Health Department has got
to sign the plat that is recorded for Lanewood Estates to
go forward.If that plat doesn t get recorded, that
proj ect doesn t go forward.The Commission can read what
these two e-mails say that go back and forth, but in a
summary what they say is that Central District Health has
put Capital Development on notice that it will not sign
its plat based upon leased water rights and it won t do
it because it's afraid that the developer, the City and
Central District Health are all going to get sued by
homeowners and other people who put millions of dollars
of investment into that proj ect on the basis of leased
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water rights that can go away at the latest on December
31st , 2008, so for those reasons, I would ask that the
motion to vacate be denied and that we go forward to
hearing on this matter, and if in fact the City can put
on competent evidence that it actually has water rights
to provide water at this time to Lanewood Estates, we can
consider that at the appropriate time and you should
consider it in connection with rendering your decision on
the merits of United Water s application.
If you have any questions , I'd be more
than happy to answer them.
Commissioner Redford.COMMISS lONER SMITH:
COMMISSIONER REDFORD:Yes , is a water
right a real property right?
It travels with -- itMR. BURNS:
generally can be conveyed by deed and travels with the
right.It's not part of the
--
it's severable from the
real property and it's subj ect to the approval by the
Whether or not it constitutes realIDWR for transfer.
property under Idaho law, I don t know the answer to that
question.
But it is notCOMMISSIONER REDFORD:
personal property?
It's not personal propertyMR. BURNS:
that I know of.I don t know the answer to that.
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COMMISSIONER REDFORD:Just one other
question.ve looked up Title 42 , Chapter 1766 that
talks about an appeal procedure for water right holders.
Are there any water right holders in that area that are
obj ecting to the license?
Yes.They re obj ecting to theMR. BURNS:
water permit.Now , this lease, if that's what you
asking about, has just come out and nobody knows about
it.We had to dig it out ourselves and I have a copy of
the statutes and I would ask the Commission to take
official notice of those statutes which specifically
provide the mechanism that says that any of the
protestants out there can challenge the license at any
time, and then it goes through the same process.It goes
through the district director and if it's not overturned
or modified there, it goes to the District Court , and if
it's not overturned or modified there, it's subject to
appeal to the Supreme Court, but these water rights or
excuse me, this water lease is subj ect to challenge at
any time by the protestants out there.
COMMISSIONER REDFORD:The agreement
called for a water right and it's your position that the
license is not a water right?
MR. BURNS:It's our position that this
lease does not allow the proj ect to go forward without
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undue delay and what the agreement specifically said
that it would obtain those water rights necessary to
allow the proj ect to go forward without undue delay and
Central District Health has now advised my client that
they will not sign the plat and the proj ect cannot go
forward without that signature on that plat and that'
the delay.Well , there are other problems as well
including fire department problems, the length of the
lease, the fact that it's challengeable by all these
people.I mean , we ll go through all the problems again
during the testimony today, but on its face, this lease
does not serve the needs and the agreement that the
parties entered into.
COMMISSIONER REDFORD:Do you have any
idea how long it would take to settle the license lssue;
that is, if I get a license and I let everybody go ahead
and object to it and file protests and so on, would it be
years before you could finally confirm that the license
was in fact going to be good for the purposes it'
intended for Mr. Yorgason?
MR. BURNS:That's the problem is there
no way to know.It depends on how hard the protestants
work against it, but if they contest it to the director
of the IDWR and if they don t like the result , then they
can contest it to the District Court.If they don t like
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the result, they can contest it to the Supreme Court, so
the answer is it could go on months or years.
COMMISSIONER REDFORD:Have you done any
investigation , is there any water right available out
there to purchase?
MR. BURNS:re not aware of any water
rights and we certainly have asked the City over and over
again to provide us with those water rights.The problem
wi th acquiring water rights or leasing water rights is
the well that is to serve the Lanewood Estates is a
specific well.It's a hole in the ground and it has a
series of other wells around it by other property owners
and they re saying
--
their position is hey, if you pump
water out of the well that is going to provide water to
Lanewood Estates, you re going to drain our wells.
You re going to adversely affect ours.Even if you have
other water a half mile away or a mile away, in order to
transfer those water rights and use them out of the well
that's designed to service Lanewood Estates , as soon as
you start pumping it, you have the same effect.
You hurt those adj oining water right
owners and that's the reason they have the ability to
challenge a lease or a purchased water right if you want
to change the point of diversion for appropriation, so
you may have water rights across town and that's all well
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and good, but if you don t have a way of getting them to
the site, and the City of Eagle doesn t, they re useless
for Lanewood Estates and that's the fundamental problem
we have is the City does not have water rights that can
be utilized to service Lanewood Estates that are not
subj ect to lengthy challenges both at the administrative
and court level.
COMMISSIONER REDFORD:Well , we seem to be
getting a little bit into the substantive issues of the
hearing to determine whether United Water is entitled to
a certificate.Just to review in my mind, it seemed to
me that we had some issues early on that the testimony
and the briefs weren t able to be filed and so on and we
have all the
--
the record lS now complete, so it seems
to me, notwithstanding all the information that you folks
have given us, that really right now we re here to decide
whether to vacate the hearing, and all of the other
information that's provided by the City is very
interesting, but it doesn t persuade me, that is , not to
make a decision on the record as to whether we can vacate
the hearing and so those are the questions I have and all
the other information will be used during the hearing in
chief to make a determination as to whether Mr. Yorgason
is entitled to the water right or to the certificate.
anybody disagrees with me, it just seems like all of it I s
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very important , but we re getting a little ahead of the
point on this motion to vacate.Thank you.
COMMISSIONER SMITH:Mr. Miller.
MR. MILLER:Thank you , Madam Chairman,
Members of the Commission.By coincidence, in my
argument I was going to come precisely to the point that
Commissioner Redford has just come to; that is, that all
the parties are present, all of the prefiled testimony
before the Commission.At a minimum what should happen
today, it seems to me, is we should proceed to receive
into evidence the pre filed testimony and hear the
cross-examination , if any, that exists and then if for
some reason , which we would oppose strongly, the
Commission thinks there is some reason to defer its
decision making process for some period of time, that
could be done, but I'm told by Mr. Woodbury that the
Commission s calendar in the near future is quite busy.
It would be an inconvenience to all the
parties to not take advantage of the opportunity that we
have today to at least make some forward progress in this
case by getting the testimony in the record and whatever
cross is required accomplished.That was going to be my
conclusion to my argument, so let me go back and touch on
a few points that were going to lead me to that
conclusion.
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The first area I was going to call to your
attention is the prefiled testimony of United Water
which , when received into evidence, will show without
dispute that United Water is ready, willing and able to
serve this development.You ll recall from the testimony
that the development is contiguous to United Water
existing service territory.You ll recall from the
testimony that there is a main line in the street
fronting the proposed service territory, that the
extension of facilities by United Water to serve the
subdivision can be accomplished at virtually no expense,
requiring only the extension of a service line from the
existing main line.
You ll recall from the testimony that
Uni ted Water has in the immediate vicinity the Redwood
well which is supported by long existing water rights and
which in itself has adequate supply to serve the
subdivision.You ll recall from the testimony that in
addi tion to the Redwood well, United Water s system is
fully integrated, that the Redwood well is supported by
reservoirs, storage facilities and by other sources of
supply, so that without doubt, United Water can meet the
day-to-day needs of this development and provide the
necessary public safety protection for fire protection.
I was also going to point out to you the
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affidavi t of Gregory Wyatt filed in response to the
motion to vacate establishing -- I won t go through it in
detail , but establishing that since the last hearing,
Uni ted Water has not in any way combined with Capital
Development to defeat the contractual rights of the City.
It was interesting to learn speaking of these contractual
issues that a lawsuit has been filed by the City.That,
of course, to me is an interesting approach to positive
customer relations , but in addition to that, one would
wonder why United Water s application should be denied
when the other potential provider is already in
li tigation with the customer.
Finally, I was going to point out the
supplemental testimony of Scott Rhead that establishes
wi thout doubt that the City does not yet have a final
non-appealable order granting it the water rights which
all along it has claimed would be the rights that would
serve this development.
We, like Mr. Burns, learned of this lease
arrangement through independent channels and I would
point out, according to the document, that it was signed
on September 12th.The prefiled testimony of the City
was due to be filed and was filed on September 17th.The
Ci ty full well knew of this when it filed its prefiled
supplemental testimony, but did not inform the Commission
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of it.It seems to me that the City does the Commission
a disservice when it does not include in its prefiled
testimony relevant information that was clearly within
its knowledge at the time the testimony was filed, so for
all these reasons, United Water has a reasonable
expectation that its application will be acted upon in a
reasonable period of time.
You can t know with certainty the motives
of another party, but from the observable facts, there is
a possible inference, potential inference, that the
purpose of the motion to vacate is to obtain further
When the current state of facts is not favorabledelay.
to a party, it's in that party s interest to obtain
further delay in the hopes that the facts will improve,
and based on those observable facts, I think the
Commission can make an inference about the purpose of
this motion.
Finally, as Commissioner Redford
indicated , we have sort of wandered into the substance of
the matter and I wanted to offer a thought with respect
to Commissioner Redford's question about the legal
ability of the City to provide service, and I've been
thinking about the implications of the Commission
recent orders in the Trailhead cases and based on those,
it seems to me a decision the Commission could ultimately
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come to or a way to think about these cases could be
this:that if the evidence shows that United Water meets
the criteria for expansion of its certificate, then the
Commission should grant the expansion.
Now , whether some other provider has the
physical or legal ability to serve are questions that, at
least in the Trailhead case, the Commission decided were
beyond its scope of interest , so in practical effect,
this may mean that there are some areas, unincorporated
areas, in the state where competition between providers
is possible and in practical effect , the developer gets
to choose.It would be nice if the Commission had
authori ty to resolve service territory disputes between
regulated and nonregulated providers as it does under the
Electrical Supplier Stabilization Act, but the Commission
has not been granted that authority directly by the
legislature , so maybe the best way to think about this
ul timately is the Commission s interest is with the
simple question of does United Water , has United Water
provided sufficient evidence to show its entitlement to
an expansion.
The question of whether there are other
potential providers is a question that I think after
reflection the Commission in the Trailhead case decided
was beyond its scope of interest, so if that's the way
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the Commission ultimately decides to think about this,
maybe much of the evidence that will come in today will
end up not being critical to the Commission s decision
but our suggestion is that we proceed to receive the
prefiled testimony, any necessary cross-examination and
see where we are at that point.
d be happy to take any questions if you
have any.
COMMISSIONER SMITH:Mr. Smith.
MR. SMITH:Thank you, Madam Chairman.
Proceeding today is going to cause two specific instances
of harm to the City.No., we have a contractual right
as evidenced by the agreement that we reached with
Capi tal Development and notwithstanding Mr. Burns
explanation of what they think the agreement says, the
Ci ty entered that agreement in good faith, expected the
developer to do the same and we have a dispute over that.
Proceeding in this hearing today causes a potential for
jeopardizing the City s contractual rights that we intend
to enforce through our agreement.
Secondly, with regard to information that
you ve now heard about the Central District Health and
the information related to things other than the water
rights that are necessary to serve, which is specifically
what the agreement deals with, there are some considered
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factual issues that are going to have to be resolved , and
one of the reasons for asking for the continuance is to
look at some of these factual issues that the City has
concerns about and that, quite frankly, we haven t had
any chance to investigate.
Now , Mr. Miller makes comments about a
disservice to the Commission about not filing the
information regarding the lease, and both Mr. Burns and
Mr. Miller raised questions about the September 12th date
on the lease.As the prefiled testimony shows , the
information that was not provided to the Commission was
the confidential agreement entered into by the developer
and United Water in which no notice was ever given to the
Ci ty about the confidential agreement
COMMISSIONER REDFORD:Isn t that the
nature of a confidential agreement?
MR. SMITH:Absolutely, but if you look
the testimony of Mr. Yorgason , he s saying that the
confidential agreement was for the benefit of the City,
that he went to United Water, got them to draft a
confidential agreement for the benefit of the City and
didn t tell the very party who was supposedly benefited
by the confidential agreement that it even existed.
, that completely undermines the issue of the benefit
of a confidential agreement when the very party who at
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least indicated is supposed to benefit from it isn t even
told about it.
COMMISSIONER REDFORD:Well, you know
Mr. Smith , I think we re getting way afield here, whether
or not the agreements, you have a forum to discuss that
in the District Court and whether or not specific
performance lies or breach of contract for damages or
whatever , that's a matter for you to take up.m really
troubled by quite a few things you said about, one about
the license, whether it'
--
you know , I'm sure it'
genuine, but whether it serves the need and so forth , I
frankly don t want to hear any more about confidential
agreements and so on.That's for another court to decide
and I am a little worried or want to ask you if this
such an emergency and now it's gotten to be so difficult
why isn t it that you haven t filed a request for a
temporary restraining order to stop these folks from
doing what it is and in the eleventh hour you come In
wi th a lawsuit for specific performance?
I think when we re talking about
genuineness, I'm a little troubled about the very nature
of the things that the City has been doing opposed to
procuring a water right and it seems to me, not getting
into the court's business, that a license to use water
which is subj ect to its termination on the license is far
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afield from a water right that is perpetual , even if it
is subj ect to original licensees or people that have the
permi t and I don t know why you haven t stepped up and
said we need to get a water right, we don t have a water
right, and if we get any further into this, which
really don I t want to, I'm just not very impressed with
the City s position.
MR. SMITH:Well, if we go forward with
the hearing, we ll present our evidence about the water
right and what it does or does not entail, Commissioner.
Nevertheless, the City has dire concerns about going
forward today without the ability to undertake discovery
to present information to the Commission that we think
would be relevant to the City s interest and so we would
again ask the Commission s discretion to give us a short
extension in which to undertake some discovery to
complete our information to present to the Commission
that deals with some of these issues that have now been
presented today.
COMMISSIONER REDFORD:Well, when we
talking about the discovery, I I d like some sort of an
offer of proof from you as to what you think you re golng
to discover , and even if there was an agreement
between -- even if United Water and Mr. Yorgason were
discussing the possibility of providing the water, so
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Tell me what you intend other than awhat?So what?
fishing expedition of some sort, what sort of information
or evidence do you think you will get by a protracted
discovery plan?
Mr. Commissioner, we re notMR. SMITH:
looking at protracted discovery.I don t think it will
take a long time, but, for instance, under our agreement
wi th the developer, the City had certain obligations to
perform.
COMMISSIONER REDFORD:I want to hear
about the discovery.
Okay, the discovery wouldMR. SMITH:
focus on what the developer did or did not do with regard
to complying with its obligations under our agreement.
That agreement was specifically --
Didn t Mr. YorgasonCOMMISSIONER REDFORD:
wi thdraw his obj ection?
No, the City withdrew it.MS. BUXTON:
Oh, the City did.COMMISSIONER REDFORD:
re getting far afield, but whatOkay, excuse me.
didn t they do?
You re asking me whatMR. SMITH:
discovery we would do.We would like to know what the
developer did or did not do with regard to completing his
obligations under the agreement.He was supposed to --
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COMMISSIONER REDFORD:So what?We know
that he entered into an agreement with United Water, so
what?I mean , what are you intending to discover that
would give us information to decide that United Water
not entitled to a certificate of convenience?
MR. SMITH:We would look at the
information that the developer was supposed to provide to
the City in compliance with the agreement.He was
supposed to submit development plans and specifically
plans for water development and, Commissioner, not a
single piece of information was provided from the
developer to the City in order to implement that
agreement which is exactly what we re talking about.
COMMISSIONER REDFORD:How is that
relevant to the determination by this Commission as to
whether United Water is entitled to a certificate?
seems to me that those are all issues that should be
brought up in the District Court in your lawsuit as to
whether or not there was a breach.I mean , put it in any
way you want to, it still is a breach or it isn I t
breach.You don t have to answer that.
MS. BUXTON:Madam Chairman?
COMMISSIONER SMITH:Ms. Buxton , yes.
MS. BUXTON:If you don t mind,
Commissioner Redford, I think that one of the
--
the
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reason you have two of us is because I focus mostly on
land use and those things , where Mr. Smith
COMMISSIONER SMITH:Is your microphone
on?
MS. BUXTON:I think so.I usually talk
loud enough , I apologize.Wi th regard to the issues with
land use, and I agree with you , Mr. Redford , that this is
probably far afield , but here are some of the issues:
mean , we ve heard argument from the other side with
regard to how they don t appreciate how the City acted
and I think that it is equal on both sides.One of the
things that the City did do with regard to the May 23rd
agreement, we did withdraw all of our protests in our
abili ty to appeal to the county to enforce some of the
Ci ty ' s requirements under its ordinances that would have
been allowed even by Ada County ordinance.We did waive
those and we immediately waived those.
We also asked on July -- on July 23rd, we
did provide written documentation and also on July 25th
wri t ten documentation to Mr. Yorgason ' s counsel,
Mr. Burns, with regard to what we knew as far as the
water right and gave him everything we had, so to say
that we have hidden anything from them, we gave them what
we had , and then also on July 23rd , our former public
works director asked by mail to Mr. Burns what is the
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schedule from the developer for the development plans and
we received no information.
We also did not receive any application
for annexation that was required under the contract at
the time the preliminary plat was approved by the county.
We did not receive that until last week.We didn
recei ve any water plans, water development plans, that
were also required under paragraph 4 of the agreement
until September 19th and the excuse we heard was well, we
forgot and I think that it's kind of a -- it's not kind
of an issue, it is a concern.
One of the things when I finally did get
Mr. Burns to give me some sort of a development schedule
from the developer in August, on August 13th or
thereabouts, the schedule did say that they weren t going
to provide any of the development plans to the City, one
of the things that the City has gone into a lot of detail
and a lot of expense in trying to prepare for and plan
this water system and the Yorgasons were very well aware
of that, and I think that one of the things that comes
here is if the Commission goes forward, the City would
have a concern with regard to franchise agreements that
it has already with United Water , and one of the things
that we had concerns about from the very beginning with
them was that they would go ahead and try to affect
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negati vely the City s ability to expand its water system
in an orderly fashion, too, and that is one of the
concerns we have if in fact this Commission goes forward
and then provides an additional certificated area , then
under the franchise agreement, it's arguable that we
wouldn t have any ability to have any remedy from our
agreement with the Yorgasons, so that's another concern
that we have.
We did receive finally documentation and
the water plans from the developer last week and have
expedi ted our review of those, and with regard to Central
District Health and that well and those water rights, we
do have, and will be happy to put in evidence, letters
wi th regard to the -- it's called the Mosca Seca
Subdivision, which is Legacy, which is one of Mr. Burns
clients wherein Central District Health based on that
water right, the water right itself , and on the well
that's being constructed there lifted the sanitary
restrictions, so I'm not 100 percent sure what facts were
presented to Mr. Reno at Central District Health from the
developer which would be really important for this Board
to understand, so we re having apples to apples instead
of apples to oranges when Central District Health on
September 14th totally outside of this situation based on
that water right and on that well construction itself and
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the fact that the development has been constructed in
more detail, they ve got roads in, they ve got -- they
actually developed this Legacy subdivision which is all
in the same area, they ve got their pipes and everything
else in and they ve worked with their sanitary
restrictions.
As of September 12th, and that's part of
the testimony that Mr. Brewer put together for you that
we supplied last week , September 12th, this Lanewood
subdi vision isn t even as close as far as development as
is Mr. Burns ' other client Legacy, so I have to say
there s a lot of questions of fact here.There s a lot
of things that will jeopardize the City s ability to go
forward with this water system in an orderly fashion
because this is an area that we re all concerned about
and that we would not want to be placed in a situation
where we would be either having no remedy under this
agreement that we had with the Yorgasons or , excuse me
wi th Capital Development or have to argue about whether
the franchise agreement, if you grant that certificate,
increasing the certificated area for United Water then
interferes with that agreement.
COMMISSIONER REDFORD:One question and
then I won t ask any more.What happens to Mr. Yorgason
when all this lawsuit goes on and assuming that we gave
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we postponed this hearing and stayed the ultimate hearing
and you went to court and fought a court battle over a
specific breach of contract, we all know that takes
years, what happens to Mr. Yorgason?Does the City post
a bond in the event you lose or what happens to him?
MS. BUXTON:ve been trying to work
this out and one of the things I did request of Mr. Burns
and got nowhere with was the fact that the City has had
some discussions, and I'd like to not disclose those on
the record , with regard to just that very issue, Mr.
Redford, and the City is prepared to do the right thing
to make sure that Mr. Yorgason is not damaged by the
City s absolute inability to provide water , and as we sit
here today, we believe that we will be able to provide
the water pursuant to the rights that we have
immediately.
COMMISSIONER REDFORD:So you re forcing
him by way of the lawsuit to accept your service?
MS. BUXTON:I wouldn t characterize it
like that, Mr. Commissioner.
COMMISSIONER REDFORD:Well, it kind of
comes out the same, doesn t it?
MS. BUXTON:As somebody ' s legal counsel,
sir, I would have to represent them and enforce whatever
rights they have.
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COMMISSIONER REDFORD:I have no more
questions.
COMMISSIONER SMITH:Okay.Does that
conclude your arguments for the City?
MR. SMITH:It does.Thank you.
COMMISSIONER SMITH:All right, we
going to take a break while the Commission discusses the
arguments we ve heard and we ll be back to let you know
our decision.
(Recess.
COMMISSIONER SMITH:I think if the
parties are ready, the Commission is ready.We have
considered the arguments that have been presented before
us and due to our very recent experience with a previous
matter, the Commission is very cognizant of its limited
powers and its responsibilities outlined in the statute,
and our responsibility is to determine whether this
utili ty, the applicant, is fit, willing and able to
provide the service that's requested and whether the
public interest requires that it do so and so that is the
purpose of our proceeding and the application that'
before us.
Wi th that in mind, then our decision is to
continue on today to take into evidence the prefiled
testimony and to conduct cross-examination upon it,
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remembering that the issue before the Commission is does
this applicant have the ability to provide service, is it
fit, willing and able, and does the public interest
require that that service be provided , is there a
request.I will remind the parties that we are aware
and I'm sure you are, of what the Commission will not do.
The Commission will not adj udicate the
rights any parties under any contracts.That'not
within our scope authority.will not determine
whether the City of Eagle does does not have water
rights.That also is not wi thin our scope of authority,
nor will we determine the City s legal rights to serve
any particular geographic area.That's not what we do
either , so with that in mind, we would like to start with
the testimony of the applicant and for purposes of
planning, I have other commitments from noon to 1: 30 and
the Commission has a 1: 30 decision meeting that should
take us about five minutes, so we will take lunch from
noon until 1:40.
Wi th that in mind, we ll go to
Mr. Miller.
MR. MILLER:Thank you, Madam Chairman.
The applicant would call Gregory P. Wyatt.
CSB REPORTING
Wilder , Idaho
COLLOQUY
83676
GREGORY P. WYATT,
produced as a witness at the instance of United Water
Idaho Inc., having been first duly sworn , was examined
and testified as follows:
BY MR.MILLER:
DIRECT EXAMINATION
Sir, would you state your name, please?
Yes, my name is Gregory P. Wyatt.
And what is your occupation?
General manager of United Water Idaho.
MR. MILLER:Madam Chairman , with the
Commission s permission , I believe it would be our intent
to present all of Mr. Wyatt's testimonies at this time
rather than re-calling him later for the subsequent
testimonies.
COMMISSIONER SMITH:Mr. Miller, you know
it's my longstanding policy that the attorney presenting
the case chooses how to do it.
policy.
MR. MILLER:I think that's an excellent
BY MR. MILLER:Mr. Wyatt, on March 26th
of this year did you have occasion to pre file written
testimony with the Commission?
CSB REPORTING
Wilder , Idaho
WYATT (Di)
Uni ted Water Idaho83676
I did.
And did that written testimony consist of
Yes, that's right.
And was there an exhibit accompanying your
There was.
Are there any additions or corrections
that you need to make to the direct prefiled testimony?
CSB REPORTING
Wilder , Idaho
Yes, there is one.At the end of
paragraph 4 on page 2, you ll see the sentence that says
See Exhibit A attached hereto.That should read, See
Exhibi t 1 attached hereto.
MR. MILLER:Thank you, Mr. Wyatt.For
three pages?
the purpose of clarity of the record , when this testimony
was originally filed, we adopted a lettering convention
for the exhibits and the exhibits were later changed to a
numbering convention.
BY MR. MILLER:If I asked you the
questions that are contained in your direct prefiled
testimony today, would your answers be the same?
Yes, they would.
And are they true and correct to the best
testimony?
of your knowledge?
Yes , they are.
WYATT (Di)
United Water Idaho83676
On May 18th of this year, did you have
occasion to file with the Commission written rebuttal
testimony?
That's correct, I did.
Are there any additions or corrections
that you need to make to your rebuttal testimony?
No, there are not.
If I asked you the questions that are
contained in your written rebuttal testimony today, would
your answers be the same as contained in your written
testimony?
Yes, they would.
And are they true and correct to the best
of your knowledge?
Yes, they are.
Madam Chairman, we wouldMR. MILLER:
request that the direct and rebuttal testimony of Mr.
Wyatt be spread on the record as if read, that the
exhibi t be marked and would tender the witness for
cross-examination.
If there s noCOMMISSIONER SMITH:
obj ection, we will spread the prefiled testimony of
Mr. Wyatt upon the record as if read and identify
Exhibi ts 1 and 3.
CSB REPORTING
Wilder, Idaho
WYATT (Di)
Uni ted Water Idaho83676
(The following prefiled direct and
rebuttal testimony of Mr. Gregory Wyatt is spread upon
the record.
CSB REPORTING
Wilder , Idaho
WYATT (Di)
Uni ted Water Idaho83676
I am employed by United Water Idaho Inc.,
Uni ted Water ) in the capacity of General Manager.
have been employed by United Water and the former General
Waterworks for 32 years.In my capacity as General
Manager, I am responsible for the overall operations of
United Water including water supply, treatment,
distribution , meter reading, customer service,
accounting, engineering, and administration.
I make this Affidavit in response to certain
statements contained in the Letter Comments of the City
of Eagle filed herein on February 23, 2007 (Letter
Comments) .
The Letter Comments (Pg. 1) state that United
Water and the City of Eagle have held meetings to discuss
the Lanewood Estates development ("Lanewood"
) ,
the
subj ect of United Water s application in this present
I would like to clarify the precise extent of thecase.
alleged
GREGORY P. WYATT (Di)
United Water Idaho
discussions " regarding Lanewood.It is true that United
Water and Mr. Bruce Smith, of the law firm Moore Smith
Buxton & Turcke, acting as representative for the City
Eagle, held several meetings during 2006 to discuss
issues relating to water rights, service territory, the
City s desire to further develop a water system, United
Water s Integrated Municipal Application Package (IMAP)
filing with the Idaho Department of Water Resources, and
other topics of interest to the parties.Specifically,
meetings were held on June 8, June 16, July 19, and
September 26 of 2006.
I have completely reviewed my notes from those
meetings, and I have no documentation or recollection of
any discussions with the City of Eagle about the Lanewood
proj ect during those meetings, as Eagle now contends in
its Letter Comments.In fact, the first record I have
indicating that the developer of the Lanewood proj ect was
interested in receiving service from United Water is
November 11, 2006, and it was not until December 21
2006, that the developer submitted a letter to United
Water requesting the proj ect be included in United
Water s service territory. See Exhibit 1 attached hereto.
Contrary to the assertions made in Eagle
Let ter Comments, Eagle and United Water did not hold
meetings to discuss the Lanewood development
GREGORY P. WYATT (Di)
United Water Idaho
specifically, nor did Eagle advise United Water of the
various reasons " for which Eagle wished to serve
Lanewood.United Water did not mention these discussions
regarding Lanewood in its filing with the Commission
simply because they did not occur.
The following is the extent of my knowledge of
discussions with the City of Eagle specifically regarding
Lanewood.In early January of 2007 , I contacted City of
Eagle Mayor, Nancy Merrill , to schedule further
discussions with her on the various issues of concern
between Eagle and United Water.It was at that time that
I informed the Mayor that United Water was preparing to
file an application with the Commission requesting
permission to expand its service
GREGORY P. WYATT (Di)
Uni ted Water Idaho
terri tory to include Lanewood.The Mayor told me that
Lanewood was wi thin Eagle s planned water service area
and she thought that the City should serve it.
responded that the developer indicated an interest in
Uni ted Water service and that the proj ect was going to be
submitted to Ada County for review and approval; and that
we were going to pursue our application through the
Commission.Uni ted Water filed the Lanewood Case No.
UWI-W-07-2 with the Commission on January 31, 2007.
Thereafter , United Water met with the Mayor and
the City s Public Works Director on February 7, 2007 to
continue discussions on various issues.The only
discussion on Lanewood consisted of my asking the Mayor
if Eagle intended to protest United Water s Lanewood
filing, and the Mayor responded affirmatively.Uni ted
Water again met with Eagle s Public Works Director on
March 2, 2007, and again I asked if Eagle was going to
protest the Lanewood filing.The Public Works Director
responded affirmatively and that a letter was being
prepared by the City s attorney and we should see it
soon.
Based on the foregoing, I can state with
certainty there was no agreement between United Water and
Eagle to the effect that United Water would not serve the
Lanewood development.United Water s Application is not
GREGORY P. WYATT (Di )
United Water Idaho
in violation of any agreement between United Water and
Eagle.
I am over the age of 21 years and make this
Affidavi t of my own knowledge.
GREGORY P. WYATT (Di)
Uni ted Water Idaho
Please state your name.
Gregory P. Wyatt.
Are you the same Gregory P. Wyatt who provided
Direct Testimony in this proceeding?
Yes, I am.
What is the purpose of your Rebuttal Testimony?
I will respond to certain statements contained
In the Amended Direct Testimony of Mayor Nancy Merrill
filed on behalf of the City of Eagle.
Do you have a general observation regarding
Mayor Merrill's testimony?
Yes.Mayor Merrill makes various references to
the effect that Lanewood should be or will be wi thin or
be part of the City of Eagle,(See Merrill Testimony page
2, line 13, and lines 17-18; page 3, lines 3-4; and page
, line 3, and line 19).I believe this more represents
Mayor Merrill's desire rather than fact.The future
Eagle City limits cannot be known with certainty. It is a
prediction of future events, and like all predictions of
the future is subj ect to some degree of uncertainty. More
specifically, it is not at all clear that the City can
annex either Lanewood or other developments in the
absence of the landowner s consent.
As I discuss later in my testimony, many
aspects of the City s case depend on the predicted
Wyatt, Re
United Water Idaho
occurrence of future events, all of which are subj ect
uncertainty. In contrast, United Water s case is based on
currently existing facts that are not subj ect
uncertainty.
Wyatt, Re
Uni ted Water Idaho
At page 2 of her testimony Mayor Merrill
describes the Lanewood development as being " adj acent
the City limits and generally surrounded by other
development" .Is this an accurate description?
Only in a very loose sense.As illustrated by
Exhibi t 3 attached the Lanewood development only touches
the City boundary along a small area at the south end of
the Lanewood development, so it is "adj acent" only along
a small border.And, it is not "surrounded by other
development. "As illustrated on Exhibit 3, virtually all
of the land surrounding Lanewood is currently
agricul tural ground.
On pages 2-3 of her testimony Mayor Merrill
argues that Lanewood should be part of the City because
it will use City amenities and will have the advantage of
the benefits of the City without paying for them.Please
respond.
Mayor Merrill does not define the words
ameni ties " or "benefits " so there is no way to know what
the so-called "amenities " or "benefits " are intended to
I would note that the Lanewood development encompass.
5 miles west and miles north of the City s business
center.
Does the City of Eagle currently provide water
service to the maj ori ty of its residents?
Wyatt, Re
Uni ted Water Idaho
No.The City of Eagle currently provides water
service to only a small portion of its residents; those
who live in the Lexington and Brookwood subdivisions
areas.At the end of April 2007 , the City s water system
served 1 328 customers, which when converted to
population using a 3X multiplier , equates to a population
of less than 4 000 persons, or only 19% of the 20 951
City of Eagle, 2007 population
Wyatt, Re
Uni ted Water Idaho
estimated by the Community Planning Association (COMPASS)
as found on the COMPASS websi te.
I f the city of Eagle currently serves water to
only about 19% of its residents, who provides water
service to the remaining City residents?
Predominantly, water service is provided to
Eagle City residents by Eagle Water Company and United
Water Idaho.Eagle Water Company s 2007 Annual Report to
the Idaho Public Utili ties Commission indicates that they
provide water service to 2 885 residential customers or a
population of about 8,655, using the 3X multiplier.
United Water Idaho currently serves 1 672 customers
wi thin Eagle City limits, representing a population of
about 5,000.The remaining population wi thin the City of
Eagle likely receives their water service from individual
and private wells.
Does the City of Eagle provide sewer services
to its residents?
Sewer service to the residents of Eagle No.
provided by the Eagle Sewer District, which is not a part
of the City of Eagle.
Does the City of Eagle provide roadway services
to its residents?
Roadway services wi thin Eagle and all ofNo.
Ada County are provided by the Ada County Highway
Wyatt, Re
United Water Idaho
District (ACHD).
What " ameni ties " then might be provided by the
City of Eagle?
I as I stated previously, as used by Mayor
Merrill in her testimony it is impossible to know what
the word is intended to encompass.However I searched
the City s websi te and found that they do offer five
parks with one more under development.They also offer a
library.
Wyatt, Re
Uni ted Water Idaho
Where are these parks located in relation to
the Lanewood development?
All the parks are located east of Eagle Road
with all but one clustered between Eagle Road and Highway
55.From Lanewood the closest park is about 4 miles away
and the farthest is over 5 miles away.In reality, the
Ci ty of Eagle s parks are closer to some residents of the
ci ties of Boise and Garden City than they are to
Lanewood.
You mentioned that the City of Eagle has a
library.Please identify its location and proximity to
Lanewood.
The Eagle City Library is located at 100 North
Stierman Way in Eagle, which is east of Eagle Road and
just north of East State Street.The library is also
over four miles away from Lanewood.
Similarly, on page 3 of her testimony, Mayor
Merrill says that Lanewood homebuyers will "be able to
take advantage of the benefits of the City without paying
for them." Do you agree?
Again , the word "benefits " is not defined, so
it is impossible to know if this is the same thing as
" amenities " or something different.
On page 3 of her testimony Mayor Merrill refers
to Exhibit 201 and states that it indicates properties
Wyatt, Re
Uni ted Water Idaho
around Lanewood that are in some phase of being included
wi thin the City.Have you reviewed Exhibit 201 and does
it show properties along with their phases of being
incl uded wi thin the City?
I have reviewed the exhibit and it appears to
indicate the City s planning area and area of impact, but
does not indicate anything related to phases of lands
wi th regard to inclusion wi thin the City of Eagle.
Wyatt, Re
Uni ted Water Idaho
On page 3 of her testimony Mayor Merrill
describes the development of a City Comprehensive Plan
and indicates that Exhibit 202 is a portion of the Plan
addressing water.Have you reviewed Exhibit 202 and does
it relate to water?
I have reviewed the exhibit and the only
significant portion relating to water is page 19 from the
exhibi t which identifies five items referring to water
rates and Eagle s future water system.
What do you make of Exhibit 202?
The City appears to have an ambitious goal of
developing its own municipal water system , but is in the
very early stages of implementation.As Mr. Yorgason
indicated in his direct testimony I believe developers
who are ready to construct now do not wish to be exposed
to the "risk and uncertainty arising out of the City
desire to enter into a new and complex venture: the
establishment, construction and operation of a municipal
water system.(Yorgason Direct, pg. 3).
On page 4 of her testimony Mayor Merrill states
that "Lanewood will be located in the midst of the City
of Eagle," and that how Lanewood is developed will "have
a significant influence on the City.Do you concur?
As I noted previously Lanewood is 3.5 miles
from the City s business center and is bordered to the
Wyatt, Re
United Water Idaho
west by agricultural grounds.Currently, and for the
foreseeable future, it is difficult to see how Lanewood
is "in the midst" of the City. Nor is it immediately
apparent how Lanewood' s choice of water provider will
have a "significant influence on the City
previously noted , United Water provides
Wyatt, Re
Uni ted Water Idaho
water service to approximately 25% of the City of Eagle I s
residents without detrimental affects to the City of
Eagle.
Mayor Merrill also indicates on page 4 of her
testimony that United Water did not participate in
development of the City s Plan.Please comment.
If United Water received notice of the planning
effort, it was only a general public notice.Uni ted
Water s participation was not specifically requested by
the City and our views were not solicited.In any event
whether United Water did or did not participate does not
seem relevant to the question of which water provider is
currently better prepared to provide service to Lanewood.
On page 4 of her testimony Mayor Merrill
indicates the City will participate in Lanewood' s Ada
County plat approval proceeding and " recommend that the
county disallow the application and direct the developer
to file a request for annexation with the City and
include using City water.The Mayor indicates there
will be "significant detrimental effects on the City " and
it would "disrupt the City s planning process and would
negatively affect the City s water system development,
roads and open spaces..." Do you concur?
No.I do not understand how water service to
Lanewood by United Water could result in the detrimental
Wyatt, Re
Uni ted Water Idaho
effects and planning process disruption the Mayor refers
to.In the first place, Mayor Merrill provides no
specifics as to how the purported detrimental effects and
planning process disruption would occur.Addi tionally,
although the City s Water Master Plan shows a future
water main in a small portion of the southwest corner of
the Lanewood development, this location follows Ada
County s planned future alignment of Floating Feather
Road, and
Wyatt, Re
Uni ted Water Idaho
Eagle would have ability to install its water main in the
road right of way regardless of who provides water
service to Lanewood.Finally, as previously stated,
United Water currently serves about 25% of Eagle
residents without any identified detrimental effects or
disruptions to the City of Eagle.
Mayor Merrill, on page 5 of her testimony,
claims that "By the time Lanewood completes the County
approval process and is ready to utilize water , the
Ci ty ' s system will be ready.Do you agree?
No.As I have noted above, this, again , is a
prediction of future events which is subj ect
significant uncertainty.Mr. Rhead, on pages 1 through 3
of his Rebuttal Testimony, clearly points out that
Eagle s contention that it will be able to provide
service to Lanewood in the near term is highly
speculati ve and fraught with potential delays.
On page 5 of her testimony Mayor Merrill also
says the City can provide water less expensively than
Uni ted Water. Do you agree?
Not necessarily.It is true that currently the
Ci ty ' s tariff rate for water service is somewhat less
than United Water The City s current rates, however
may not include recovery of the costs associated with the
City s ambitious plan to build a municipal water system.
Wyatt, Re
United Water Idaho
These costs are unknown but potentially huge. Whether
those costs are eventually recovered through consumption
rates, connection fees, surcharges, or some other
mechanism , they will create upward pressure on the City
overall cost of service.
Does that conclude your testimony?
Yes it does.
Wyatt, Re
Uni ted Water Idaho
(The following proceedings were had in open
hearing.
COMMISSIONER SMITH:Mr. Woodbury, are you
going to participate in the cross-examination or are you
just observing?
MR. WOODBURY:No, I'll participate.
COMMISSIONER SMITH:You will , how
interesting.Okay, why don t you start, then.
MR. WOODBURY:Thank you.
CROSS-EXAMINATION
BY MR. WOODBURY:
Mr. Wyatt, on page 2, paragraph 3 of your
direct testimony which was submitted in paragraph form,
you reference the Company s integrated municipal
application package, its IMAP filing with the Idaho
Department of Water Resources.Are you familiar with the
Company s filing?
Yes.
Would it be fair to say that the planning
area that you submitted in that excludes communi ties
which have their own water supply system, such as parts
of Eagle?
When the planning area was drawn in 2000,
CSB REPORTING
Wilder , Idaho
WYATT (X)
United Water Idaho83676
yes, I think it did exclude certain areas of territories
where certain other providers, i. e., Meridian, Capitol
Water , others , provided service and so yes, we did draw
the line to exclude those.
What planning assumption did United Water
make regarding the City of Eagle s municipal water
system?Did you assume it would be static?
We made no assumptions with regard to the
Ci ty of Eagle s water system.At that time it consisted
of the subdivisions in Lexington , Lexington Hills and
just began the Brookwood Subdivision area which is north
of Floating Feather and east of Eagle Road, and so we had
no indications from the City of Eagle that they had at
that point in time, in the year 2000, any further plans
so no consideration was given to it.
Is it true that the City of Eagle objected
or filed a protest to your IMAP filing?
Yes, it is correct that they did and they
have subsequently withdrawn it.
Can you describe what the nature of the
filing was?
Act ually, I don t think I would be very
accurate for me to try to do that.It's been many years
since I read their protest and I couldn t recall it very
clearly.
CSB REPORTING
Wilder, Idaho
WYATT (X)
Uni ted Water Idaho83676
In the Company s certificate application
in this case, you state there are no other water
providers with existing facilities in the vicinity of
Lanewood Estates capable of providing service on the
timetable requested by the developer.Were you aware at
the time of the Company s filing that Lanewood was
si tuated in the City s area of impact?
Yes, I was.
Were you aware at the time of the filing
that the City s water plan
--
that pursuant to the City
water plan that the City intended to provide water
service to Lanewood area?
m trying to recall when I learned of the
Ci ty ' s planning area and that's why I'm having some
difficul ty lining that up with when this request for
service from Capital Development came in.ll tell you
that I can t tell you for sure.
In your rebuttal testimony on page 1, you
state it's not at all clear that the City can annex
ei ther Lanewood or other developments in the absence of
In light of that statement,the landowner s consent.
what is the significance of the annexation and
cooperation agreement and Lanewood' s recent request for
annexation?
My understanding is that the agreement, as
CSB REPORTING
Wilder , Idaho
WYATT (X)
United Water Idaho83676
I understood it , between the City of Eagle and Capital
Development for the annexation agreement was , as has been
expressed here earlier this morning, a conditional
agreement that would work in concert with the City of
Eagle being able to be successful in procuring
unprotested water rights for permits they had
applications for at the time in the vicinity of Lanewood,
so it's my understanding that that agreement was designed
to accomplish that and then to allow the City of Eagle a
short period of time , 90 days, to get that done and that
has not occurred.
You state on page 2 of your rebuttal that
virtually all of the land surrounding Lanewood is
currently agricultural ground.Are you inferring or
implying that there are no proposed developments in that
area apart from Lanewood?
No, I wasn t implying anything more than
what I stated.
Do you know whether there are any proposed
or approved plats in the surrounding area?
I do not know.
Isn t the surrounding area where the City
has actively implemented its water service plan?
Could you ask that again?m not qui
sure I understood what you re asking me.
CSB REPORTING
Wilder, Idaho
WYATT (X)
United Water Idaho83676
Isn t the surrounding area where the City
has actively implemented its water service plan?
CSB REPORTING
Wilder, Idaho
What do you mean by "surrounding area
Area surrounding Lanewood.
I think as I understand the City s plan
today, I think that's correct.
Has United Water had any other developer
contacts regarding service to the surrounding area
surrounding Lanewood?
Yes, we have.
Do you know, are you familiar with the
approval that Lanewood had from the county with respect
to its application before the county?
Not intimately, but I'm aware that they
had filed their --
Do you know whether the application
indicated a provider of water?
Generally, that's the case.
And what did the application and the
county approval , who did they identify as a water service
I don t know.
MR. WOODBURY:Madam Chairman , Staff has
no further questions.Thank you, Mr. Wyatt.
COMMISSIONER SMITH:Thank you,
provider?
WYATT (X)
Uni ted Water Idaho83676
Mr. Woodbury.
Mr. Burns, do you have any questions?
MR. BURNS:I have no questions.
BY MR. SMITH:
COMMISSIONER SMITH:Mr. Smi th .
MR. SMITH:Thank you, Madam Chairman.
CROSS-EXAMINATION
Mr. Wyatt, United Water uses leased water
rights, don t they?
CSB REPORTING
Wilder , Idaho
Uni ted Water uses leased water rights for
surface water supply.
MR. SMITH:No further questions.
COMMISSIONER SMITH:Do we have questions
from the Commissioners?
COMMISSIONER REDFORD:Did you say service
or surface?
THE WITNESS:I said surface.
No questions.
COMMISSIONER REDFORD:Okay, thank you.
MR. SMITH:Madam Chairman?
COMMISSIONER SMITH:Mr. Smith.
MR. SMITH:In light of Mr. Redford'
question , I have a cold, I may have misheard Mr. Wyatt'
WYATT (X)
Uni ted Water Idaho83676
Don you also lease ground water?
No,don not knowledge.
Let me follow up with that,then.Have
you checked to see you use ground water?
testimony.
COMMISSIONER SMITH:Okay, go ahead.
BY MR. SMITH:
CROSS-EXAMINATION
(Continued)
Mr. Wyatt , did you say you lease surface
We lease surface, s-e, water,
Not recently.The question has not been
posed to me, so I had no reason to verify on my own.
CSB REPORTING
Wilder, Idaho
MR. SMITH:Okay, thank you.No further
water?
COMMISSIONER SMITH:Any redirect
yes.
questions.
Mr. Miller?
WYATT (X)
United Water Idaho83676
BY MR. MILLER:
REDIRECT EXAMINATION
Mr. Wyatt, is United Water Idaho capable
of providing service to the development?
CSB REPORTING
Wilder , Idaho
If you I re referring to the Lanewood
development, the answer is yes.
Is United Water Idaho willing to provide
service to the development?
Yes, we are.
Does United Water Idaho have the
managerial capability to successfully provide service?
Yes, it does.
Would it be in the public interest in your
opinion for United Water to provide water service?
I believe it would.
MR. MILLER:Thank you.
COMMISSIONER SMITH:Thank you, Mr. Wyatt.
If there s no obj ection , we will excuse the witness.
(The witness left the stand.
MR. MILLER:Madam Chairman , in a moment I
will call Mr. Rhead and I'd ask the Commission s guidance
on this question:There are portions of Mr. Rhead '
testimonies that touch on matters the Commission has from
the Bench indicated may not be relevant to its decision
WYATT (Di)
United Water Idaho83676
and I expect during the course of the hearing there may
be cross-examination questions that are in the same
category.m willing to proceed either way, that we
could go ahead and put the testimony in even though it
may not ultimately have a maj or bearing on the
Commission s decision or we could attempt to excise from
the testimony matters that may not bear on the
Commission s decision.Likewise, when cross-examination
questions come up that bear on matters that may not be
relevant ultimately, I'm content not or to at this point
not make obj ections and have the Commission have to
decide is each question relevant or not relevant,
recognizing that once the transcript is complete, the
Commission can make its judgment about what it should
consider or shouldn t consider or , al ternati vely, if the
Commission desires, I can make obj ections as we go along
to try and keep out of the record the things the
Commission has indicated it's not particularly interested
in.
I guess I would prefer the first course of
action so that we don t have to spend a lot of hearing
time arguing over obj ections, and I'm willing to trust
the Commission s judgment to ultimately review the record
and determine what matters it wants to take into account.
COMMISSIONER SMITH:ll be at ease for
CSB REPORTING
Wilder , Idaho
COLLOQUY
83676
a moment.
(Off the record discussion.
COMMISSIONER SMITH:All right, we ll be
back on the record.The Commission after discussing how
to conduct the remainder of the testimony feels that the
public interest is a very broad concept which would allow
for whatever the parties think bears on that issue and we
also have no desire to interfere with the presentation of
the parties ' cases, so it's our intent to just take the
testimony as it's filed and if there are obj ections , we
will deal with those as they come up, so Mr. Miller,
re ready for your next witness.
MR. MILLER:Thank you, Madam Chairman.
The applicant would call Scott Rhead.
SCOTT RHEAD
produced as a witness at the instance of United Water
Idaho Inc., having been first duly sworn , was examined
and testified as follows:
DIRECT EXAMINATION
BY MR. MILLER:
Sir, would you state your name, please?
Scott Rhead.
CSB REPORTING
Wilder , Idaho
RHEAD (Di)
United Water Idaho83676
And what is your occupation?
m the director of engineering for United
Mr. Rhead , on March 26th , 2007 , did you
have occasion to prefile written testimony in this case
CSB REPORTING
Wilder, Idaho
consisting of four pages?
Yes, I did.
And was that testimony accompanied by an
Yes, it was.
Are there any additions or corrections
that need to be made to your testimony, and I'm directing
your attention to the top of page 2?
Yeah, there is.There s a few minor ones.
At the top of page 2 where it says "Exhibit A " it should
say "Exhibit No.It's the same correction on page
In paragraph 4?
In paragraph
Directing your attention -- so in
paragraph 4, there are two places that Exhibit A should
be changed to Exhibit 2; is that correct?
Yes, there s two.
Then directing your attention to paragraph
Water Idaho.
6, is there a correction that needs to be made there?
exhibi t?
RHEAD (Di)
United Water Idaho83676
Yes.Right at the beginning it says
Uni ted Water Idaho Operations Inc.," that should say
CSB REPORTING
Wilder , Idaho
United Water Operations Idaho Inc.We should reverse
Idaho " and "Operations.
Mr. Rhead, it's customary when presenting
testimony to ask the question whether the answers
contained in your testimony are true and correct.
Can I interrupt?
Yes , sir.
We have one more that I believe we need to
fix on the direct testimony on page 4 , No. 10.
That's what I was going to direct your
Excuse me, go ahead.
All right.Would you desire to strike
from your testimony the last sentence of paragraph 10?
Yes , that's my desire.
All right, and with that correction , if
now ask you, if I asked you the questions contained in
your written prefiled testimony today, would your answers
Yes, they would.
And are they true and correct to the best
of your knowledge?
Yes, they are.
attention to.
be the same?
RHEAD (Di)
United Water Idaho83676
Mr. Rhead, did you also on May 18th have
occasion to prefile written rebuttal testimony in this
CSB REPORTING
Wilder , Idaho
case consisting of eight pages?
Yes, I did.
And are there additions or corrections
that need to be made to that testimony?
No, there is no changes to the rebuttal.
And that testimony was accompanied by an
Tha t 's correct.
If I asked you the questions that are
contained in your written rebuttal testimony today, would
your answers be the same?
Yes, they would.
And are they true and correct to the best
of your knowledge?
Yes, they are.
Mr. Rhead, on September 17th , 2007 , did
you have occasion to prefile written supplemental
Yes, I did.
And are there additions or corrections
that need to be made to that testimony?
Yes, there are.Kind of a minor numbering
item again on page 1, the very bottom line No. 23 where
Exhibi t No.
testimony?
RHEAD (Di)
Uni ted Water Idaho83676
it says "Exhibit 105," that should say "No.It'
also the same correction on page 2, line 4 , and on line
7 .
MR. MILLER:I apologize to the Commission
for that numbering error.It was entirely my error and
not Mr. Rhead' s error.
BY MR. MILLER:Directing your attention
to page 3 of the testimony, do we need to rearrange a
couple of questions and answers?
Yes, we do.I believe the intent was to
end the submittal with lines 10 and 11 , so lines 10 and
11 should fall below 12 , 13 and 14.
MR. MILLER:Again, I apologize for that
sequencing error.It was my error and not Mr. Rhead' s .
BY MR. MILLER:If I asked you the
questions that are contained in your supplemental
testimony today, would your answers be the same?
Yes, they would.
And are those answers true and correct to
the best of your knowledge?
Yes , they are.
And that testimony was accompanied by an
exhibi t which was improperly labeled Exhibit 105 and
should be relabeled Exhibit 5; is that correct?
That's correct.
CSB REPORTING
Wilder, Idaho
RHEAD (Di)
United Water Idaho83676
MR. MILLER:Madam Chairman , we would ask
that the testimony contained in Mr. Rhead' s three
testimonies be spread on the record as if read, that the
accompanying exhibits be marked and the witness is
available for cross-examination.
COMMISSIONER SMITH:Wi thout obj ection,
that is so ordered.
(The following prefiled direct, rebuttal
and supplemental testimony of Mr. Scott Rhead is spread
upon the record.
CSB REPORTING
Wilder , Idaho
RHEAD (Di)
United Water Idaho83676
I am employed by United Water Idaho Inc.,
Uni ted Water ) in the capacity of Director of
Engineering.I have been employed by United Water for
15 years.In my capacity as Director of Engineering, I
am responsible for the design and construction of united
Water s integrated water production and delivery system.
I am a licensed Professional Engineer in the State of
Idaho.
I make this Affidavit in response to certain
statements contained in the Letter Comments of the City
of Eagle filed herein on February 23, 2007 (Letter
Comments) .
The Letter Comments (Pg. 2) raise the question
of whether United Water has adequate source of supply and
supporting water rights to serve the Lanewood
Development.The primary source of supply for the
Lanewood Development will be the Redwood Creek Well, the
location
SCOTT RHEAD (Di )
Uni ted Water Idaho
of which is depicted on the map attached hereto as
Exhibi t 2.The Redwood Creek Well is capable of
producing 1,000 million gallons annually and has a peak
pumping capacity of 2,100 gallons per minute.In the
year 2006 , the Redwood Creek Well had an annual
production of 14.65 million gallons and a peak daily
production of 317 gallons per minute.
Because the United Water production and distribution
system is completely integrated , other adequate sources
of supply are available in the event the Redwood Creek
Well is unavailable, due to maintenance or other reasons.
For example, the 2.0 million gallon Hidden Hollow Storage
Reservoir provides operational peaking and fire
protection to this area.
Based on the size of the proposed Lanewood
Development, United Water estimates that at build--out an
additional 380 customers using alternate irrigation would
be added to the United Water system. For planning
purposes United Water assumes, based on historical
consumption records for this type of user , peak day
demand of O. 7 gallons per minute per customer. This
translates to an approximately 266 gallons per minute of
additional peak demand (380 x 0.7).In 2006, the peak
day pumping demand for the Redwood Creek Well was 317
gallons per minute.The additional 266 gallons per
SCOTT RHEAD (Di)
United Water Idaho
minute of peak demand results in a total proj ected peak
demand of 583 gallons per minute.This demand is well
below the well capacity and provides the assurance that
this and other developments can be served without
j eopardi zing service to current customers.
The Redwood Creek Well produces water for the United
Water System under two water rights, Permit 63-11878 and
63-12194 , which have a combined peak diversion rate of
068 gallons per minute and an annual volume of 1,086
million gallons.
SCOTT RHEAD (Di)
Uni ted Water Idaho
Based on the foregoing, it is my professional
opinion that United Water has adequate source of supply
supported by adequate water rights to provide safe
reliable and continuous service to the Lanewood
Development.
The Letter Comments (Pg. 2) call into question
the time frame for development requested by the Lanewood
developer.Based on information provided by the
developer , United Water understands the developer desires
to commence construction of the water distribution system
within the development in July of 2007.As depicted on
Exhibi t 2, attached hereto, United Water s existing 12"
main line facilities are along Linder Road, which is
immediately adj acent to the eastern boundary of the
Lanewood development.Connection of the Lanewood
development to this 12' mainline will not require
construction of any off-site mainline extensions. Also
depicted on Exhibit 2, the Lanewood development is
contiguous to United Water s existing service territory
and to United Water s existing, integrated water deli very
system.
Based on the foregoing it is my professional
opinion that United Water has both available source of
supply and available transmission facilities to
immediately provide safe , continuous and reliable service
100 SCOTT RHEAD (Di)
Uni ted Water Idaho
to the Lanewood development.
Uni ted Water Operations Idaho Inc., an
affiliate of United Water Idaho, has a contractual
agreement with the City of Eagle to provide operation and
maintenance services to the City with respect to its
municipal water system.As a consequence, I am familiar
wi th the design and operation of the City s municipal
water system.
The City has one operational well, known as the
Lexington Well,and one well under construction known
the Brookwood Well.These wells are located a t the
eastern edge of the Eagle system, and are approximately
two and one half (2 ~) miles from the Lanewood
Development.Serving the Lanewood Development from the
Lexington or Brookwood Wells
101 SCOTT RHEAD (Di
Uni ted Water Idaho
would require construction of two and one half (2 ~)
miles of transmission mainline along Floating Feather
Road.
In 2006, the City drilled two test wells in an
area approximately one quarter and one half miles south
of the Lanewood Development.The location of these test
wells is depicted on Exhibit 2, attached hereto.While
the City has applied to the Idaho Department of Water
Resources (IDWR) for water right permits, the City
Application is still pending before the IDWR and no water
right permits have been issued.
Before a well may be placed in service to
provide service to a public drinking water system
approvals are required from the Idaho Department of
Environmental Quality (DEQ). The DEQ cannot issue its
approvals until a water right permit has been issued by
The DEQ has not issued approvals required toIDWR.
place either of the two wells into service.
Assuming that IDWR and DEQ approvals are10.
eventually obtained and that either of the test wells are
up-graded to municipal standards, it would be necessary
to construct main line facilities to connect the well (s)
to the Lanewood Development.
11.I am over the age of 21 years and make this
Affidavi t of my own knowledge.
102 SCOTT RHEAD (Di)
Uni ted Water Idaho
Please state your name.
Scott Rhead
Are you the same Scott Rhead who previously
filed Direct Testimony in this proceeding?
Yes, I am
What is the purpose of your Rebuttal Testimony?
I will respond to certain statements contained
the Amended Direct Testimony of Vern Brewer filed on
behalf the City Eagle.
you have general observation regarding Mr.
Brewer s testimony?
In my Direct Testimony, I provided aYes.
detailed explanation of United Water s ability to serve
the Lanewood development.In his Amended Direct
Testimony, Mr. Brewer does not dispute any part of my
Direct Testimony regarding United Water s ability to
serve the development. Because my testimony is not
challenged, I take it that the City does not dispute
United Water s ability to serve.
On page 2 of his testimony Mr. Brewer discusses
various water facilities, including wells, which have
been or are being constructed as a part of a City water
Does the City have ground water rights orsystem.
permits from the Idaho Department of Water Resources
(IDWR) for any of the wells to which Mr. Brewer refers?
103 Rhead, Re
Uni ted Water Idaho
No.IDWR has issued no approvals of pending
water rights associated with these well facilities.
104 Rhead, Re
United Water Idaho
At page 3 Mr. Brewer also refers to the City
having "received a favorable staff recommendation " and
that he "expects the applications to be approved in the
June-July period.Are you aware of any recent favorable
staff recommendations regarding the City s applications
with IDWR in this matter?
No.I have reviewed the public record in the
City s IDWR water right application proceeding.There is
an internal IDWR Staff memo dated February 27 , 2007 that
concludes that the data lacking from the application in
November 2006 has now been provided.However , six (6)
Protestants in the proceeding have filed Technical
Comments on April 25, 2007 disputing the Staff analysis,
stating in part, "The City of Eagle s Addendum does not
provide more and/or better information that the Hearing
Officer can use to evaluate whether the proposed water
rights will inj ure other water rights . The Protestant'
Technical Comments are attached as Exhibit
What will be the next steps in the IDWR water
right permit approval process for Eagle?
That is difficult to say with certainty, and it
is equally difficult to say with certainty, as Mr. Brewer
has, that the application can be expected to be approved
in the June-July period.
Why is that the case?
105 Rhead, Re
United Water Idaho
The City s application for the water rights
permi ts is currently in the hands of the hearing officer
awai ting his written decision and determination.Even if
the hearing officer was to deliver a decision favorable
to the City in June or July, the Protestants in the
proceeding, and there are many, would have approximately
two
106 Rhead, Re
United Water Idaho
weeks to request that the matter be reconsidered.With
the large number of Protestants this is a potential
outcome.A reconsideration process could take another
several months.If the City prevailed at that stage, one
or more Protestants could still appeal the decision to
the Director of the IDWR, and after that process was
completed , a Protestant could, if they chose, appeal the
decision to District Court.All of this uncertainty and
the significant amount of time the appeal processes could
take makes it not only unlikely that Eagle will receive
its approved water rights permits in the June-July
period, but nearly impossible.
You have mentioned Protestants in Eagles water
rights permits application proceeding, and at page 3 of
his testimony Mr. Brewer states, "
...
part of the delay in
getting the applications approved was caused by United
Water protesting the applications. Is this a fair
characterization of the delay?
Absolutely not.It is true that United Water
protested Eagle s water rights application because United
Water owns and operates its Redwood Creek Well less than
one mile east of the proposed new wells.Uni ted Water
was concerned that the new diversions could inj ure the
rights of Redwood Creek.In addition, United Water
believed that Eagle s requested diversion of almost
107 Rhead, Re
Uni ted Water Idaho
cubic feet per second (cfs) was not based on any approved
Master Plan or justification related to future demands.
So United Water had very legitimate reasons for
protesting Eagle s applications.It is not uncommon for
water right permit applications to experience significant
delay when even one protestant enters the process.
How many other Protestants were there other
than United Water?
108 Rhead , Re
United Water Idaho
The following is a list of Protestants still
active in the Eagle permit application and the IDWR
process as of May 17, 2007:
REPRESENTED BY CHARLES HONSINGER:
DANA & VIKI PURDY
5926 FLOATING FEATHER
EAGLE ID 83616
286-9701
JOSEPH & LYNN MOYLE
C/O MICHAEL MOYLE
480 N PLUMMER RD
STAR ID 83669
870-6667
EUGENE MULLER
320 N PALMER LN
EAGLE ID 83616
286-7369
CHARLES MEISSNER JR
3101 N PALMER
EAGLE ID 83616
866-8688
CHARLES HOWARTH
C/O GUNNER & MATT
833 N PALMER
EAGLE ID 83616
286-9760
HOWARTH
MIKE DIXON PRES
HOOT NANNEY FARMS INC
C/O TERRY WHITE
RT 1 2650 WING RD
STAR ID 83669
INDIVIDUAL PARTIES:
JERRY & MARY TAYLOR
3410 HARTLEY
EAGLE ID 83616
286-7575
109 Rhead, Re
United Water Idaho
CORRIN & TERRY HUTTON
10820 NEW HOPE RD
STAR ID 83669
286-7752
SAM & KARl ROSTI
1460 N POLLARD LN
STAR ID 83669
286-7685
Fax: [phone]
LEEROY & BILLIE MELLIES
6860 W STATE ST
EAGLE ID 83616
286-7257
DEAN & JAN COMBE
6440 W BEACON LIGHT
EAGLE ID 83616
286-7174
What has become of United Water s protest?
As a result of the new well tests and
associated test pumping United Water confirmed that
Redwood Creek would not likely be affected beyond
acceptance limits.United Water s protest in this matter
was withdrawn early in the hearing process in December
2006.
At page 4 of Mr. Brewer s testimony he refers
to a planned 16" main that will run through the Lanewood
development to connect and loop other portions of the
City s planned system.At page 6 Mr. Brewer implies that
service by United Water would hinder the City in
implementing its Master Water Plan.Does water service
by United Water to the Lanewood development obstruct or
110 Rhead, Re
United Water Idaho
impede Eagle s ability to complete its anticipated 16"
water main?
111 Rhead, Re
Uni ted Water Idaho
No.Ada County Highway District (ACHD) has
existing rights-of-way along Floating Feather Road and
Lanewood Drive in the area of Eagle s concern.The
proposed development keeps these rights-of-way intact in
the development plan.ACHD anticipates a slight
realignment for a portion of Floating Feather at the
southwest end of Lanewood but will maintain the necessary
corridors.The City will not be obstructed or impeded in
its ability to construct its mainline because water
service is provided to Lanewood by United Water.
fact, Eagle s construction of its proposed main line will
resul t in an unnecessary duplication of water service
assets since United Water currently has adequate water
supply and transmission capacity to serve Lanewood and
surrounding areas.The Lanewood development is
contiguous to United Water s existing certificate
boundary and constitutes only a small extension of that
boundary.
At page 4 Mr. Brewer says the City provides
water less expensively than United Water.Do you agree?
Not necessarily.It is true that currently the
City s tariff rate for water service is somewhat less
than United Water The City s current rates, however
may not include recovery of the costs associated with the
Ci ty ' s ambi tious plan to build a municipal water system.
112 Rhead, Re
Uni ted Water Idaho
These costs are unknown but potentially huge. Whether
those costs are eventually recovered through consumption
rates , connection fees, surcharges, or some other
mechanism, they will create upward pressure on the City
overall cost of service.
113 Rhead , Re
Uni ted Water Idaho
At page 5 of Mr. Brewer s testimony he claims
that the City of Eagle encourages conservation of water
by requiring the use of surface water for irrigation.
Please comment.
Requiring the use of surface water for
irrigation can not be equated to encouraging conservation
for several reasons.First of all, the use of surface
water for irrigation, where available, is required both
by Idaho state law and Ada County ordinance.Thus , Eagle
can make no "conservation " claim for requiring what the
law already requlres.Secondly, in many cases, using
un-metered, less expensive irrigation water may lead
greater use, not less use of the overall water resource.
It is true irrigation is a different type of water (i. e.
not treated to potable standards) but this in itself is
not conservation.Finally, the City of Eagle
historically has not provided its existing water
customers with any conservation education or information
water saver kits, or other conservation programs
typically offered by water providers.In contrast,
Uni ted Water has had an active and varied conservation
program in place for many years.In addition , United
Water has recently completed and the Commission has
recently approved in part a detailed revised Water
Conservation Plan.
114 Rhead, Re
United Water Idaho
At page 5 of his testimony Mr. Brewer seems to
contradict your Direct Testimony and states that the
Ci ty ' s wells are constructed to Idaho Department of
Environmental Quality (IDEQ) standards.
Mr. Brewer may be correct that the wells are
constructed" to IDEQ standards, however, they are
currently classified with IDEQ and IDWR merely as test
wells.
115 Rhead, Re 7 a
United Water Idaho
Even if these two test wells are constructed to
IDEQ standards can they be used to provide municipal
water supply without an associated water right permit?
IDEQ is very clear in this regard.No.The
Ci ty has been allowed to construct these wells to
municipal standards but they are considered as test wells
only and cannot provide public water service without a
water right permit.This requirement can be found in
IDAPA 58.01.08,503,19c approved March 30, 2007.As I
have testified above, the permitting process may require
considerable more time.
Mr. Brewer, at page 6 of his testimony,
suggests that if United Water serves Lanewood, the City
will forgo revenue from those customers that could
partially off-set costs of constructing the new trunk
line network and storage facilities.Is this a
legitimate concern?
I believe what this indicates is that the
Ci ty ' s intended water system in the area is very much in
its infancy.It does not yet have approved water rights
permi ts for its wells; it does not yet have an integrated
transmission and distribution system; it does not yet
have storage capacity for fire protection.In contrast,
Uni ted Water s system in the area is currently fully
integrated with adequate supply redundancy.As Mr.
116 Rhead , Re
Uni ted Water Idaho
Brewer implies, the costs of constructing such new
facilities are significant and would duplicate United
Water s facilities already constructed to provide service
in the area.
Does this conclude your testimony?
Yes it does.
117 Rhead , Re
Uni ted Water Idaho
Please state your name.
Scott Rhead.
Are you the same Scott Rhead who
previously filed Direct and Rebuttal Testimony in this
proceeding?
Yes I am.
What is the purpose of your
Supplemental Testimony?
I will provide an update on the
status of the City of Eagle s Application for Permits
Nos. 63-32089 and 63-32090 pending at the Idaho
Department of Water Resources ("IDWR"
, "
Department"
In your capacity as Director of
Engineering for United Water, have you previously
participated in water right application proceedings at
the Department and are you familiar with procedures used
by the Department to process water right applications?
Yes, I have participated in numerous
water right application proceedings and I am familiar
wi th the Department's procedures.
As of the date of the filing of your
Supplemental Testimony, has IDWR issued a final,
non-appealable order granting the City s Application?
No it has not.
Please describe acti vi ty that has
118 Rhead, Supp
United Water Idaho
occurred at the Department since May 24 , 2007 , with
respect to the City s Application.
On July 18, 2007, the assigned
Hearing Officer issued a Preliminary Order approving in
part the permits subj ect to various conditions.The
Preliminary Order is attached as Exhibit 5, pgs. 1-25.
Under Department procedures,
119 Rhead, Supp
United Water Idaho
parties may then petition for reconsideration.Several
parties, either through counsel or on their own behalf,
filed Petitions for Reconsideration.The City also filed
a Petition for Reconsideration, obj ecting to some of the
condi tions contained in the Preliminary Order. Those
Petitions are attached as Exhibit 5, pgs 26-51.
What occurred in response to the
Petitions.
On August 21, 2007 , the Hearing
Officer issued an Order granting Reconsideration.That
Order is attached as Exhibit 5, pgs 52-53.As indicated
in the Order , the Hearing Officer intends to reconsider
the matter based on the Petitions and then issue a
revised Order.
As of the date of your Supplemental
Testimony, has the Hearing Officer issued a revised
Order?
No he has not.
Is there any statutory or procedural
deadline by which the Hearing Officer must issue a Final
Order?
As I understand it, there is not.
Please describe the procedures that
will be in effect once the Hearing Officer does issue a
Final Order.
120 Rhead, Supp
Uni ted Water Idaho
Once the Order is final, parties
opposing it will have 14 days to appeal to the Director
of the Department for review of the Order.Other parties
then have 14 days to respond.The Director then
determines whether to grant review.If review is granted
the Director sets a briefing schedule and may hear oral
At the conclusion of briefing and argument theargument.
Director has 56 days to issue his Final Order, which time
period can be extended for good cause.The Director also
may
121 Rhead, Supp
Uni ted Water Idaho
review the Hearing Officer s Order on his own motion even
if no parties to the case appeal.
When the Director issues a Final
Order is the matter at an end?
Not necessarily. Wi thin 28 days,
parties may file a Petition for Judicial Review in State
When the District Court rules on the
Peti tion for Judicial Review is the matter then at an
Not necessarily. The judgment of the
District Court.
District Court is appealable to the Idaho State Supreme
When the Idaho State Supreme Court
end?
Court.
rules, is the matter then at an end?
Not necessarily.The Supreme Court
may refer the matter back for further proceedings.
Does that conclude your testimony?
Yes it does.
122 Rhead, Supp
United Water Idaho
open hearing.
(The following proceedings were had in
COMMISSIONER SMITH:Mr. Woodbury.
BY MR. WOODBURY:
MR. WOODBURY:Thank you, Madam Chairman.
CROS S - EXAMINAT ION
Mr. Rhead, am I correct in my
understanding, I think that Mr. Wyatt indicated that
CSB REPORTING
Wilder , Idaho
Uni ted Water s system is an integrated water system, I
guess, with the exception of some non-contiguous areas?
That is correct.
And what is meant by the phrase
II integrated water system
Well , what it means is our sources of
supply are all connected with each other.There s a
network of pipes and transmission mains, so our sources
of supply, our reservoirs are all integrated and tied
into the same water system.
And does that mean that any one particular
source is not dedicated to the use of any particular
subdivision or customer?
Yes , that's generally correct.
You have a familiarity, also, with United
123 RHEAD (X)
United Water Idaho83676
Water Operations Idaho Inc.
Yes , I do.
And they provide water management for the
Ci ty of Eagle s municipal water system?
CSB REPORTING
Wilder , Idaho
That's correct.
And do you have any position in that --
that's an affiliate of United Water , an unregulated
That's correct.
And do you occupy any position in that
management of the municipal water system?Do you have
any direct oversight?
m not an officer in the company.
provide advice and engineering support.
But are you familiar with the design and
operation of the City s municipal water system?
Yes, I believe I am.
And would you characterize that as an
integrated water system?
I would say for the part we manage, yes.
Okay.You indicate in your supplemental
testimony that you re also familiar with Water Resources
water rights applications and procedures.
That's correct.
And you re familiar with and you
affiliate?
124 RHEAD (X)
Uni ted Water Idaho83676
attached as Exhibit 105 to your supplemental the City of
Eagle s applications or I guess the initial order of
Water Resources with respect to two water right
application numbers totaling 8.9 cfs?
Yes, I am.
And is it your belief that if Water
Resources were to grant those applications that that
would comprise sufficient water to serve Lanewood?
Yeah , that would be correct.
And you ve also attached, I guess, the
protests to that water right.Does United Water make
application for water rights where it receives protests?
That happens from time to time, yes.
And based upon your familiarity with these
water rights, do you believe that -- do you have any
opinion as to the probability of their success with
respect to the City of Eagle s water rights
application?
MR. MILLER:Wi th respect to Mr. Woodbury,
the question asks for the witness to engage in wild
speculation.The purpose of the testimony was merely to
lay out the procedures that are to be followed and not to
as k Mr. Rhead to express, in effect, legal opinions on
the merits of arguments.
COMMISSIONER SMITH:Mr. Woodbury.
CSB REPORTING
Wilder, Idaho
125 RHEAD (X)
Uni ted Water Idaho83676
MR. WOODBURY:Well, I perhaps
misunderstood Mr. Rhead' s supplemental testimony.It was
my understanding that he was being held up as an expert
with respect to water rights applications and procedures,
but if that's not the case, then
COMMISSIONER SMITH:Even to the extent of
predicting the results of individual cases?
MR. WOODBURY:Based upon Mr. Rhead' s
experience with United Water applications and protests to
its water rights and perhaps he could express an opinion
as to the preliminpry Water s finding that the water
level declines in area wells below a level which
reasonable.
Well , I guess if youCOMMISSIONER SMITH:
have a particular question about Exhibit 5 and its
findings, why don t you go there.
Is it Exhibit 5MR. WOODBURY:Thank you.
or 105?
COMMISSIONER SMITH:Exhibi t 5.
BY MR. WOODBURY:Exhibi t 5, Preliminary
Order, page 17 of 53, paragraph 11.
m going to need a copy of it up here,
please.
If counsel for United WaterMR. WOODBURY:
might provide the witness with his exhibits.
CSB REPORTING
Wilder , Idaho
126 RHEAD (X)
Uni ted Water Idaho83676
(Mr. Miller approached the witness.
BY MR. WOODBURY:Paragraph 11, page 17
Exhibi t 5.
Okay, one more time.Page 11?
Page 17.
Page 17.
Paragraph 11.
Okay, I have it.
And does that paragraph state, "Pumping of
9 cfs will not cause water level declines in area wells
below a level that is reasonable
I guess what this is saying is that's what
the department understands from the test pumping that was
done.
In your familiarity with this particular
application, do you know what type of a decline the
protestants were indicated from test results?
You know, United Water actually withdrew
from this case and so I really didn t follow it to the
specifics of when this order actually came out to tell
you the truth.I mean, my understanding is that as a
resul t of the test pumping, the department issued this
order which was generally that there are manageable and
reasonable water levels with this application.
Thank you.
CSB REPORTING
Wilder, Idaho
127 RHEAD (X)
Uni ted Water Idaho83676
There certainly were a list of conditions,
though, but that's my understanding, but we did
wi thdraw.
I believe that the -- do you know what
type of injury is required to demonstrate that a water
right should be denied?
Mr. Woodbury, could COMMISSIONER SMITH:
just remind you of what the Commission s going to be
deciding and what maybe Water Resources might be deciding
and ask you if you really want to think about that
question again?
MR. WOODBURY:Well, I would like that by
way of clarification and that would conclude my area of
cross.
BY MR. WOODBURY:Do you have an answer to
that question?
Can I get you to restate?
My question was what type of injury is
generally required to demonstrate that a water right
should be denied?Do you have an opinion?
You know, that can be all over the map.
There are water rights that depending on the geology and
the aquifer conditions, you know, there really isn t a
straight answer to that question.
Well, bringing it back to the applications
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Uni ted Water Idaho83676
that are under consideration before Water Resources --
I thought that wasCOMMISSIONER SMITH:
your last question.
Oh, yeah.ll withdrawMR. WOODBURY:
that.
Okay, thank you,COMMISSIONER SMITH:
Mr. Woodbury.
Mr. Burns.COMMISSIONER SMITH:
I have no questions.Than kMR. BURNS:
you.
COMMISSIONER SMITH:Mr. Smi th .
MR. SMITH:Thank you, Madam Chairman.
CROSS-EXAMINATION
BY MR.SMITH:
Mr.Rhead,you familiar with water
rights used by United Water are you not?
Generally,yes.
Did you hear my question Mr.Wyatt
about United Water s use of leased water?
Yes, I did.
And United Water does use leased water to
provide service, does it not?
I would like to maybe build on Greg
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Uni ted Water Idaho83676
answer.
I would prefer you answer my question,
Okay, restate.
Does United Water use leased water?
Yes, we do.
Do you use leased surface water?
Yes, we do.
Do you use leased ground water?
Yes, we do.
If you would direct your attention to your
supplemental testimony filed on 9/17 , please.
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Wilder, Idaho
Okay.
MR. MILLER:Madam Chairman, could
retrieve my book?
COMMISSIONER SMITH:Yes, you can.
please.
(Mr. Miller approached the witness.
BY MR. SMITH:Mr. Rhead, looking at
page 2 , line 16 through page 3, line 14, do you see
I do.
And would it be fair to characterize that
testimony as being about procedures with regard to
issuing decisions at the Department of Water Resources?
That's correct.
that?
130 RHEAD (X)
Uni ted Water Idaho83676
Okay, and when you describe those
procedures, that's your understanding of the procedures
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Wi lder, Idaho
that are potentially available; is that right?
That's correct.
And you have no way of knowing if those
are the procedures that will actually be required with
regard to the applications filed by the City that are the
subj ect of the preliminary order issued by the
department, do you?
I have no way of knowing that exactly,
And you don t know if anybody is going to
, I don
You don t know if there s going to be a
peti tion to the District Court, do you?
No, I don
And you don t know if there will be any
appeal to the Supreme Court, do you?
No, I don
And you don t know that the Supreme Court
may refer the matter back for further proceedings , do
No, I do not.
And in fact, it's true you don t know
no.
appeal?
you?
131 RHEAD (X)
Uni ted Water Idaho83676
what's going to happen with regard to the department'
decision on those permit applications filed by the City,
do you?
don know what the department going
do,that'true.
And fact,the department could issue
those permits and the City just proceed to develop that
water right,correct;isn that possible?
made to your
If the department issues
Isn t that possible, Mr. Rhead?
Sure.
And with regard to the corrections you
testimony regarding the construction of a
water line to the south edge of the Lanewood property,
it's my understanding you withdrew that testimony; is
that correct?
That's correct.
And you withdrew that testimony because
that line exists; correct?
I believe that's true.
Okay.Mr. Rhead, did United Water receive
from Capital Development a set of design drawings or
engineering drawings for their water system?
No, not to my knowledge.
Who would have received those if United
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Uni ted Water Idaho83676
Water had received them?
They would have come in to our
construction coordinator Mr. John Lee.He works directly
for me.
Okay, and to the best of your knowledge,
you don t know if any information was received from
Capital Development about the design and construction of
their water system?
You know, I think we saw preliminary plats
that showed lot layouts and general density
configurations, but I don t think we ve ever actually
seen anything about detailed water design , no.
And as I understood your testimony with
regard to Mr. Woodbury s question about your integrated
system, it was your testimony that United Water can
utilize a number of water rights to serve a particular
customer; is that correct?
That's generally correct.
And according to I think it was your
direct testimony here, you were going to primarily serve
out of the Redwood Creek well; is that correct?
That's the closest one, yes.
Okay, can you identify any other water
rights or any other wells that might be used to serve
Lanewood?
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Well, depending on the pressure and
whether Redwood is down for maintenance, the Floating
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Wilder , Idaho
Feather well would likely deliver water there.Depending
on the time of year, we could actually bring in water
from the Swift well complex, Willow Lane.Actually,
water could come all the way from the Marden treatment
plan to there.
And the Marden treatment plant is where?
On the eastern side of our system in Boise
by the Warm Springs Golf Course.
Okay; so if something were to happen with
the Redwood Creek well , you re testifying that you would
have a backup; is that correct?
I believe that's correct.
MR. SMITH:I don t believe I have any
further questions at this time.
COMMISSIONER SMITH:Thank you, Mr. Smith.
Do we have questions from the Commission?
COMMISSIONER REDFORD:No.
Mr. Miller?
COMMISSIONER KJELLANDER:No.
COMMISSIONER SMITH:Do we have redirect,
MR. MILLER:Just a very few.
134 RHEAD (X)
Uni ted Water Idaho83676
REDIRECT EXAMINATION
BY MR. MILLER:
You were asked a question by Mr. Woodbury
regarding United Water s affiliate that operates a
portion of the Eagle water system and whether that was
integrated in the same way or using the term in the same
way as you described United Water s system.Where is the
part of Eagle s water system that the Company does
operate and manage?
It's primarily three subdivisions.It'
north of Floating Feather Road.It's between Eagle Road
and old Highway 55.It's Lexington Hills, Brookwood and
Trailhead subdivisions.
And how far
Excuse me, Echo Creek Trail Subdivision
excuse me.
Right, and how far away is that area from
the area in question in this case?
Lanewood is approximately two-and-half
miles west of these systems that we re referring to
here.
Very good, and I take it that the
--
from
your knowledge, the City s system to the extent it exists
in the Lanewood area is not yet integrated with the rest
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Uni ted Water Idaho83676
of its system?
, that's correct.Yeah , there will be
two separate systems when they build it initially.
think their plan is to tie it in someday.
But at this point not?
MR. SMITH:I want to obj ect to this
question.This is calling for speculation.This witness
has no basis for understanding what the City may or may
not do.
COMMISSIONER SMITH:Mr. Miller.
MR. MILLER:The witness has testified
that by virtue of his professional duties in the
operation of Eagle s system, he s familiar with the
system , he s a licensed professional engineer with
years, at least, of experience as a water company
engineer.It seems to me he s qualified to express
opinions in this area.
COMMISS lONER SMITH:Wouldn t it be
speculati ve?
MR. MILLER:All opinions to some extent
are forward looking.When it crosses the line between
informed judgment and speculation is for the -- I guess
the Commission will have to decide.
COMMISSIONER SMITH:I think the
Commission is going to sustain the obj ection.
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MR. MILLER:That would be fine.
BY MR. MILLER:Mr. Smith as ked you some
questions about the lease of ground water by United Water
and prevented you from providing a full explanation of
those circumstances.Could you provide for the
Commission an explanation of what and how United Water
does with respect to the lease of water?
We have an annual reasonably established
program where we rent or lease water based on
availabili ty of willing partners.The primary
requirement for the Company is in surface water.We have
one location at our Maple Hills well complex where the
pumping diversion rate, the equipment can deliver more
than the water right is available for and so we rent or
lease on an annual basis around 5 or 600 acre feet per
year for one ground water location.
United Water does not, I take it,
predicate its entire ability to serve on leases of water.
No, absolutely not.
Mr. Smith asked you some questions about
what you know about the future of the Eagle water permit
application.Let me ask you a couple of other questions
about what you know now and what you don t know about the
future.Do you know now that United Water has the
abili ty to provide service to this system, to this
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United Water Idaho83676
area?
Yes, I do.
Do you know now that United Water has the
managerial capability to provide and to operate this
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Wilder, Idaho
Yes, I do.
Do you know now that United Water has
adequate source of supply to provide water to this
Yes, I do.
Do you know now as of today that the City
of Eagle does not have a final non-appealable water right
Yes, I do.
Is it unknowable, changing from knowable
to unknowable, when and if the City will ever have a
water right permit to serve this subdivision?
It's unknowable at this time to me.
MR. MILLER:That's all I have.
COMMISSIONER SMITH:Thank you,
Mr. Miller , and with no obj ection , Mr. Rhead will be
(The witness left the stand.
COMMISSIONER SMITH:Let's go at ease for
system?
system?
permi t?
excused.
a minute.
138 RHEAD (Di)
United Water Idaho83676
record.Mr. Burns.
(Off the record discussion.
COMMISSIONER SMITH:ll be back on the
MR. BURNS:Intervenor Capital
Development, Inc. would call J. Ramon Yorgason to the
stand.
J. RAMON YORGASON,
produced as a witness at the instance of Capital
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Wilder, Idaho
Development, Inc., having been first duly sworn , was
examined and testified as follows:
DIRECT EXAMINATION
Mr. Yorgason , could you please state your
full name and address for the record?
J. Ramon Yorgason.My address is 6200
BY MR. BURNS:
North Meeker in Boise.
What is your capacity with intervenor
Capi tal Development, Inc.
m the president of Capital
Are you the same J. Ramon Yorgason that
submitted affidavit testimony filed March 16th, 2007
Development.
139 YORGASON (Di)
Capi tal Development83676
consisting of three pages?
Yes.
And are you the same individual who filed
direct rebuttal testimony which was filed on May 18th,
2007 consisting of six pages?
Yes.
And the same individual who filed direct
supplemental testimony filed September 17th , 2007
consisting of 10 pages and Exhibits 301 through 308?
Yes.
COMMISSIONER SMITH:So going to be
picky about this.My copy of his direct is stamped on
March 26th.
MR. BURNS:The affidavit is stamped March
16th.
COMMISSIONER SMITH:But it was filed with
the Commission on March 26th.
MR. BURNS:Mine shows it was received and
filed on March 16th.
(Mr. Burns approached the Commission.
MR. MILLER:I think I know the answer.
COMMISSIONER SMITH:Mr. Miller.
MR. MILLER:I believe that early in this
case United Water and Capital Development filed
affidavi ts when the case was still under modified
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140 YORGASON ( Di )
Capi tal Development83676
procedure.At a prehearing conference, it was determined
that we would go to an evidentiary hearing, but it was
also determined that the previously filed affidavits
could be resubmitted as prefiled testimony, so the
earlier versions were submitted when the case was in
modified procedure.Later identical affidavits were
submi tted in the form of testimony, as testimony, so it
could well be that Mr. Burns is looking at the first
version of the testimony or first version of the
affidavi t which was later filed in identical form with
the word "testimony" on it.
COMMISSIONER SMITH:Okay.
MR. BURNS:That's very possible.
COMMISSIONER SMITH:So I would just li
the record to reflect that the affidavit we re looking at
is the one that was filed with the Commission on the 26th
of March.
BY MR. BURNS:Mr. Yorgason , in
preparation for today ' s hearing, have you reviewed your
prior testimony filed on March 26th and your prior direct
rebuttal testimony filed on May 18th and your direct
supplemental testimony that was filed on September
17th?
Yes.
Now, other than the updated information
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141 YORGASON (Di )
Capi tal Development83676
that was included in your direct rebuttal testimony
concerning the terms of your purchase of the property
which comprises Lanewood Estates and the resulting amount
of the interest carry that you would incur and the
updated information that was included in your direct
supplemental testimony concerning the status of the
proj ect approvals for Lanewood Estates, do you have any
addi tions or corrections to make to your prior testimony
that was filed in these proceedings?
Not in the testimony.It's my
understanding that there s a change in some of the
headings or the page numbers that was later -- there
some question about the headings.
Are you talking about the exhibits,
perhaps , that were attached to your --
Yes, on the exhibits.
--
direct supplemental testimony as
Exhibits 301 through 308?
Yes.
MR. BURNS:Madam Chairman, the exhibits
that were attached to Mr. Yorgason ' s direct supplemental
testimony were marked in the fashion they were by my
secretary based upon a conversation that she had with
somebody here at the Staff.In reviewing this
documentation in preparation for today, I noted that they
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142 YORGASON (Di)
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had been marked inconsistent with the rules.I have
brought substitute exhibits all marked with new exhibit
stickers and would ask the Commission whether they would
prefer that we exchange the exhibits.They re identical
in all respects, other than with respect to the markings
of the exhibits on the bottom right-hand corner and we
prepared to go forward, and either way we note that the
rules of the Commission say if there are no obj ections
the form of the exhibits, they will be accepted as
submi tted.re also ready to substitute a complete set
of the exhibits for everybody.We have multiple copies
if the Commission would like us to do that to have
properly marked exhibit numbers.
COMMISSIONER SMITH:Well, it's very
fortui tous that we hit this point at the noon hour which
was when we were going take our break, so Mr. Burns, I
think it probably would be nice if during the lunch hour
you provide those and people can get the ones that are
correctly marked into their notebooks so that when we do
cross-examination , if there are any questions, there
won t be any confusion about which page we re on.
Mr. Smith.
MR. SMITH:Madam Chairman, which exhibits
are we talking about?
COMMISSIONER SMITH:Okay, we will be at
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143 YORGASON (Di )
Capi tal Development83676
recess for lunch now until 1: 40.
(Noon recess.
Thank you.
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144
83676
YORGASON (Di )
Capi tal Development