Appeal from the District Court of the Second Judicial District for Idaho County Honorable John Bradbury, Presiding

Transcription

1 IN THE SUPREME COURT OF THE STATE OF IDAHO LINWOOD LAUGHY, KAREN ) HENDRICKSON, and PETER GRUBB, ) ) Plaintiffs-Respondents, ) ) vs. ) ) IDAHO DEPARTMENT OF ) TRANSPORTATION, ) ) Defendant-Appellant, ) ) and ) ) CONOCOPHILLIPS COMPANY, ) ) Intervenor-Appellant. ) Supreme Court Docket Nos and Idaho County Docket No BRIEF OF INTERVENOR-APPELLANT CONOCOPHILLIPS COMPANY Appeal from the District Court of the Second Judicial District for Idaho County Honorable John Bradbury, Presiding Erik F. Stidham Brian C. Wonderlich Holland & Hart LLP Suite 1400, U.S. Bank Plaza 101 South Capitol Blvd Boise, ID Attorneys For Intervenor-Appellant Natalie Havlina Laurence Lucas Advocates for the West P.O. Box 1612 Boise, Idaho Attorneys For Plaintiffs-Respondent Karl Vogt Steven L. Olsen Lawrence G. Allen Idaho Department of Transportation 3311 W. State St. Boise, Idaho Attorneys For Defendant-Appellant

2 TABLE OF CONTENTS Introduction... i Statement Of The Case Nature of the Case Course of Proceedings..., Statement Of Facts... 5 A. The Transportation Plan... 7 B. Safety is the Benchmark of the Transportation Plan C. ltd Required Enhanced Safety Measures in the Transportation Plan D. Laughy Lawsuit Issues Presented On Appeal Summary Of Argument Argument A. Standard Of Review B. ltd's Issuance of the Permits Should Be Affirmed As There Was No Finding Of Prejudice To Substantial Rights Under I.C (4) C. The District Court Wrongly Failed to Defer To ltd's Interpretation ofidapa D. ltd's Primary Concern With Public Safety and Convenience is Supported By Substantial Evidence A District Court Is Not To Substitute Its Judgment Substantial Evidence Need Not Be Uncontradicted The Administrative Record Documents That Safety and Convenience Were ltd's Primary Concern... 25

3 4. The District Court Did Not Apply the Substantial Evidence Standard E. ltd Properly Made A Reasonable Determination of Necessity F. The Laughy Group Wrongly Implies That U.S. 12 Should Not Be Used For Commercial Purposes G. The Laughy Group Failed To Exhaust the Available Administrative Remedies Request for Attorney Fees Conclusion... 37

4 TABLE OF AUTHORITIES FEDERAL CASES Martin v. Occupational Safety and Health Review Commission, 499 U.S. 144, III S. Ct. 1171, 113 L. Ed. 2d 117 (1991) STATE CASES Allen v. Blaine County, 131 Idaho 138,953 P.2d 578 (1998) American Lung Association of Idaho/Nevada v. State Department of Agriculture, 142 Idaho 544, 130 P.2d 1082 (2006) Anderson v. Larsen, 136 Idaho 402, 34 P.3d 1085 (2001) Angstman v. CtiyofBoise, 128 Idaho 575, 917 P.2d409 (Ct. App. 1996) In re: App. of Ackerman, 127 Idaho 495,903 P.2d 84 (1995) Bennett v. State, Department of Transport, 147 Idaho 141,206 P.3d 505 (Ct. App. 2009) Blimka v. My Web Wholesaler, LLC, 143 Idaho 723, 152 P.3d 594 (2007) Bonner County v. Bonner County Sheriff Search & Rescue, Inc., 142 Idaho 788, 134 P.3d 639 (2006) Castaneda v. Brighton Corp., 130 Idaho 923, 950 P.2d 1262 (1998) Chisholm v. Idaho Department of Water Resources, 142 Idaho 159, 125 P.3d 515 (2005)... 23, 24, 25, 27, 31 Cooper v. Board of Prof Discipline of Idaho State Board of Medical, 134 Idaho 449,4 P.3d 561 (2000)... 18, 24 Cowan v. Board ofcomm'rs, 143 Idaho 501, 148 P.3d 1247 (2006) Duncan v. State Board of Accountancy, 149 Idaho 1, 232 P.3d 322 (2010)... 22, 23 ~ 1 -

5 JR. Simplot Co., Inc. v. Idaho State Tax Commission, 120 Idaho 849, 820 P.2d 1206 (1991)... 19, 23 KMST, LLC v. County of Ada, 138 Idaho 577, 67 P.3d 56 (2003) Kirk-Hughes Development v. Kootenai County Board of County Comm'rs, 2010 WL (Idaho June 2, 2010)... 20, 21 Kuna Boxing Club, Inc. v. Idaho Lottery Commission, 149 Idaho 94, 233 P.3d 25 (2009)... 19, 20 Lane Ranch Partnership v. City of Sun Valley, 144 Idaho 584, 166 PJd 374 (2007) Lochsa Falls, L.L.C. v. State of Idaho, Idaho Transport Board, 147 Idaho 232, 207 P.3d 963 (2009) Sons & Daughters of Idaho, Inc. v. Idaho Lottery Commission, 144 Idaho 23,156 P.3d 524 (2007)... 18, 19 Spencer v. Kootenai County, 145 Idaho 448, 180 P.3d 487 (2008) Taylor v. Canyon County Board o/comm'rs, 147 Idaho 424, 210 P.3d 532 (2009) Terrazas v. Blaine County, 147 Idaho 193,207 P.3d 169 (2009) Westway Construction Inc. v. Idaho Transport Department, 139 Idaho 107, 73 P.3d 721 (2003)... 35, 36 Wohrle v. Kootenai County, 147 Idaho 267, 207 P.3d 998 (2009) FEDERAL STATUTES 16 U.S.C. 1273(b)(3) U.S.C. 1274(a)(1); ii -

6 STATE STATUTES I.e I.e (1) I.e I.e (3)... 6 I.e I.e I.e , 18 I.e I.e (2)... 35, 36 I.e I.e (1)... 18,23,24 I.e (2) I.e (3)... 16, 18, 19,24 I.e (4)... 1, 2, 17, 19,20,21 - iii -

7 Introduction Intervenor-Appellant ConocoPhillips Company C'ConocoPhillips") needs to transport two specially constructed coke drums from Lewiston, Idaho to its petroleum products refinery in Billings, Montana. The Billings refinery supplies gasoline, diesel, and other products to customers in Idaho, Montana and the surrounding region. The twenty-year-old coke drums currently at the Billings refinery are nearing the end of their useful lives. ConocoPhillips appeals a district court ruling which reversed the Idaho Transportation Department's ("ITD") issuance of permits allowing the shipments to be made through Idaho, the most direct and feasible overland route to the refinery. Transporting the coke drums is a significant undertaking, requiring permits for overlegal transport (Le. an oversize and overweight highway shipment) from ltd. To get the new coke drums to Billings, ConocoPhillips hired Emmert International ("Emmert"), a company with extensive experience with large transportation projects. During the last few years, Emmert submitted data to and worked with ITD on an application for the needed permits. As required by ltd, Emmert developed a plan to transport the coke drums ("transport plan") in a manner which maximizes safety and minimizes inconvenience to others. Pursuant to the transport plan, the two coke drums will be halved, reduced to four shipments, and will travel up United States Highway 12 ("U.S. 12") between the hours of 10 p.m. and 5:30 a.m. when few other vehicles are typically on the road. The transportation plan also calls for extensive safety measures designed to prevent and respond to any accidents or mechanical issues and provide access around the loads for emergency vehicles

8 Plaintiffs-Respondents Linwood Laughy ("Laughy), Karen Hendrickson ("Hendrickson), and Peter Grubb ("Grubb") (collectively the "Laughy Group") filed a lawsuit to block the four ConocoPhillips' shipments to Billings. The district court wrongly granted the Laughy Group the relief they sought, reversing ltd's issuance of the permits. First, the district court failed to make the required finding that the Laughy Group suffered prejudice to substantial rights owing to issuance of the permits; a required element under I.C (4) which was never even raised by the Laughy Group. Second, the district court erred in misconstruing the applicable regulatory framework and in not giving deference to ltd's interpretation of its own regulations. In denying ltd deference, the district court did not apply the appropriate test. Rather, the district court wrongly chose to look outside the administrative record and misapplied federal case law. The district court further compounded the error by incorrectly construing ltd's regulations to create a new 10-minute traffic-delay limitation requirement for any overlegal shipment where neither the regulations, nor ltd's interpretation of them, had ever provided such a limitation. Third, the district court wrongly found that ltd did not make public safety and convenience a primary concern. In doing so, the district court ignored ample record evidence reflecting ltd's primary concern for public safety and convenience and abused its discretion by substituting its judgment for that ofltd. Fourth, the district court erred when holding that ltd did not properly consider the "reasonable necessity" of the shipments. The district court ignored the plain language of a key administrative document and ignored other substantial evidence in the record. -2-

9 Fifth, the Laughy Group failed to exhaust their administrative remedies prior to filing the lawsuit with the district court. Statement Of The Case 1. Nature ofthe Case This appeal arises out of the ltd's issuance of permits allowing the transport on U.S. 12 of four large shipments of coke drum sections needed to repair facilities at ConocoPhillips' oil refinery in Billings, Montana. The Laughy Group petitioned the district court for judicial review of the permits pursuant to Idaho Administrative Procedure Act ("APA"), I.e to The district court reversed ITD's issuance of the permits. The district court held that its review of the permits was not limited to the administrative record and it declined to defer to ltd's interpretation of the regulations at issue. Further, the district court found that the administrative record lacked substantial evidence that ITD gave "primary concern" to public safety and convenience and of the "necessity" of the shipments. The district court repeatedly substituted its judgment for that of ITD. 2. Course of Proceedings On August 16,2010, the Laughy Group filed a Motion for Temporary Restraining Order andlor Preliminary Injunction; and Supporting Brief, which included the affidavits of Laughy, Grubb, and Hendrickson. Administrative Record ("AR"), ITD The Laughy group moved ex parte and was granted a Temporary Restraining Order ("TRO"). Also on August 16, - 3 -

10 2010, the Laughy Group filed a Petition for Judicial Review; and Request for Immediate Injunctive Relief. R. Vol. I, pp On August 17,2010, the Court granted the TRO. Also on August 17,2010, ltd moved pursuant to I.R.C.P. 40(d)(1) to disqualify the district court judge. R. Vol. I, pp The Laughy Group opposed disqualification, stating their Petition only sought judicial review and "will consequently be decided based upon a review of the record developed by the agency." Opposition to Motion for Disqualification, dated August 18,2010, R. Vol. I, pp On August 19,2010, ConocoPhillips filed a Motion to Intervene, a corresponding Brief in Support, and the affidavit of Steven Steach. Id at pp Also that day, the district court heard the motion to disqualify and motion to intervene and issued an Order denying the motion to disqualify without prejudice, granting ConocoPhillips' motion to intervene on an interim basis, scheduling a hearing for August 23,2010, and vacating the TRO. Id at p On August 20, 2010, ltd finalized its agency action through issuance of a Memorandum of Decision ("MOD"), AR, ITD , and issuance of the overlegal permits allowing Emmert to transport ConocoPhillips' coke drums on U.S. 12, AR, ITD2290, 2300, 2310, All parties filed briefing leading up to the August 23,2010 hearing. See R. Vol. I, pp ConocoPhillips also filed a Motion to Strike portions of the Laughy, Grubb, and Hendrickson affidavits. Id. at pp On the day of the hearing, August 23, 2010, the Laughy Group for the first time requested that the district court take additional evidence and attached the same to their Reply Brief. Id. at p. 121, n.l, The Laughy Group also attempted to submit further evidence -4-

11 on the day of the hearing in the form of affidavits. See, e.g., TR, Vol. I, pp Counsel for ltd and counsel for ConocoPhillips objected. TR Vol. I, pp At the August 23rd hearing the parties and district court agreed to proceed on the merits rather than address the preliminary injunction. Id. at pp The district court stated it would issue a decision on the merits the next day. Id. at pp On August 24,2010, the district court issued its Opinion reversing issuance of the permits and remanding the matter to ITD. R. Vol. I, pp ConocoPhillips filed its Notice of Appeal on August 25, 2010, id. at pp , and an Amended Notice of Appeal on August 26,2010, id. at pp The Clerk's Certificate and Clerk's Certificate Re: Exhibits were filed on August 27,2010. Id. at pp ITD filed its Notice of Appeal on August 30,2010. Id. at pp Also on August 30, 2010, the Clerk's Certificate of Appeal was filed. Additionally, on August 26,2010, ConocoPhillips filed a Motion to Expedite Appeal with this Court, along with a Brief in Support and supporting affidavits. On August 30, 2010, ltd filed its own Motion to Expedite, Brief in Support, and supporting affidavit. On August 30, 2010, this Court consolidated the appeals, granted the Motion to Expedite, set an expedited briefing schedule, and a set hearing for October 1, Statement Of Facts ConocoPhillips needs to repair existing coke drums at its Billings, Montana refinery which supplies fuel and other energy products to customers in Idaho, Montana, and the surrounding region. AR, ITD ; R. Vol. I, pp As part of the repair project, ConocoPhillips purchased two new coke drums to replace existing equipment. AR, ITD0238; R

12 Vol. 1., p. 83. These drums are intended to replace the drums currently in use at the Billings Refinery and are critical to the continued long term-safe and reliable operation of that refinery. AR, ITD00626; R. Vol. I, pp ; MOD, AR, ITD The existing drums are twenty years old and at the end of their useful life. R. Vol. I, p. 83; AR, ITD00626, ltd is an executive department of Idaho state government established by the Legislature and headed by the Idaho Transportation Board. I.C Among ltd's powers and duties are the location, design, construction, maintenance, and reconstruction of state highways and the planning, design, and development of transportation systems that the Idaho Transportation Board determines to be in the public interest. I.C (3). Additionally, ltd is authorized to exercise its discretion and "issue a special permit to the owner or operator of any vehicle allowing vehicles or loads having a greater weight or size than permitted by law to be carried over or on the highways and bridges." I.C In the business for over forty years, Emmert is a transportation company that specializes in hauling large loads. Petition/or Judicial Review, R. Vol. I, p. 7,,24; AR, ITD Emmert was hired by ConocoPhillips to perform the inland transportation of two Coke Drums ("drums") in two pieces each to the ConocoPhillips refinery at Billings, Montana. AR, ITDOOI09. Each section, laying on its side, is approximately fifty feet long, twenty-six feet wide, and twenty-six feet tall. AR,ITDOOI09. Emmert has engaged in extensive engineering and long range planning over a number of years to ensure the drums will be transported safely and successfully from Lewiston to Billings. Emmert began the process in 2007 when it was engaged by ConocoPhillips to perform a -6-

13 feasibility study of transporting the drums to the Billings refinery. AR, ITD00626, ITD As part of this study, Emmert examined the viability of land transportation of the drums in one or two sections from numerous seaports including Houston, Duluth or Minneapolis/St. Paul, New Orleans, and Catoosa, OK. AR,ITD The study ultimately determined that ground transportation permits could not be obtained from any of these ports for numerous reasons, including obstructions that could not be removed or avoided, weight restrictions on various roads and bridges, and having to pass through highly congested areas. Id Emmert then examined the feasibility and viability of transport from Lewiston. Emmert shared technical data with ltd in order to determine the feasibility and viability of the shipments traveling by truck in Idaho from Lewiston along U.S. 12 to the Montana border. Id at ITD Emmert performed or hired others to perform numerous detailed field surveys of the route. See, e.g., AR, ITD00029, 00042, 00626, 00629, 00744; see also id at ITD (describing the route in minute detail and containing over 150 pictures of all sections of the route). A. The Transportation Plan Emmert drafted and submitted a detailed transportation plan to ltd on four occasions, July, 2010, March, 2010, November, 2009, and September, See AR, ITDOOOOI (July, 2010), ITD00317 (March, 2010), ltd (November, 2009), ltd (September, 2009). The size, number and detail ofthese transportation plans illustrate not only the significant engineering and planning invested by Emmert to ensure the project is safe and successful, but also the high standard ltd held Emmert to before issuing permits to transport the drums. See, - 7 -

14 e.g., AR, ITDOOOOI Indeed, on numerous occasions ltd asked Emmert for more information, improvements and changes to the proposed plans, and otherwise engaged in a thorough review. See, e.g., AR, ITD ; 00317; ltd emphasized to Emmert that the primary concern was to "minimize inconvenience and maximize safety to [Idaho] motorists." See, e.g., AR, ITD The July 2010 version of the transportation plan reflects three years of effort and careful planning. See, e.g., AR, ITD Each transport will include five pilot car escorts, two State Police escorts, and two sign boards. Land Transport Plan-Idaho, AR, ITD00270, The transport will be led by a State Police car and the first of five pilot cars, which will display a sign board flashing "wide load ahead." Id. The second pilot car will be one-half mile behind the first, id., and the third pilot car will be approximately one-hundred yards behind the second. Id. Next will come an Emmert steersman vehicle positioned approximately one hundred yards in front of the load. Id. "The load will consist of the lead (pull) tractor, the dolly transporter with the module loaded and the rear (push) tractor." Id at ITD Traveling with the tractors will be "all service equipment, materials and spare parts." Id at ITD Behind the load will be a second steersman vehicle, the fourth pilot vehicle, the fifth pilot vehicle with a flashing sign reading, "wide load ahead," and finally the second State Police car. Id. at ITD Additionally, there will be flaggers and flagger stations positioned throughout the route. See, e.g., 15 Minute Rule Delay Spreadsheets, AR, ITD An Emmert International Field Logistics Coordinator will travel one day ahead of the loads to coordinate parking spots and - 8 -

15 utilities. Land Transport Plan-Idaho, AR, ITDOOI13. An Operations Supervisor will travel two hours ahead of the load coordinating the utilities. Id All parties involved will be in direct radio communication throughout the transport. Id at ITD "This will not only include Emmert International personnel but also civilian escorts, traffic control personnel and police escorts." Id at ITD Olobal Position Systems COPS) will be utilized to provide continuous and accurate location information for the loads. Id at ITD "In addition Emmert International will provide satellite phone communications with each load. This system will ensure direct contact is maintained with the loads at all times. The Emmert International Field Logistics Coordinator, Operations Supervisors and lead flagger/escort will be equipped with [the satellite phones and OPS]." Id To transport the four loads Emmert will "utilize [two] sets of transportation equipment to transport the Drum sections in pairs." Land Transport Plan-Idaho, AR at ITDOOI13. Travel is limited to between 10 p.m. and 5:30 am. Over-Legal Permits, AR, at ITD2290, 2300, 2310, During each leg of the trip, the transport will pull off the road at regular intervals to allow passage by other road users. Land Transport Plan-Idaho, AR, ITDOOI14. Emmert has identified one-hundred-two (102) primary and secondary "pull offs" where traffic can pass the load along the mile route from Lewiston to the Montana border. i5-minute Rule Delay Spreadsheets, AR, ITD Emmert then broke the trip down into seventy-eight individual segments between primary pull offs, each of which was measured for travel distance and time. Id Of the seventy-eight segments, only eleven segments are projected to take more - 9 -

16 than ten minutes and none are projected to take more than fifteen minutes. I Id at ltd There will be thirty-nine flagger stations spread at regular intervals along the route. Id The flaggers will be in direct communication with the remainder of the personnel and the load throughout the trip and will provide advanced warning of an approaching emergency, including cases in which a person needing emergency medical treatment is not traveling in an emergency vehicle (i.e. ambulance, police car, or fire-rescue vehicle), should one arise. Land Transport Plan-Idaho, AR, ITDOOI On the first leg of the trip, during which the load will move from Lewiston to Orofino, no segments are projected to exceed ten minutes. I5-Minute Rule Delay Spreadsheets, AR at ITD It is during this leg that the transports will cross Arrow Bridge at milepost Over-Legal Permits, AR, at ITD002290, 2300, 2310, Arrow Bridge is currently under construction and Emmert has worked closely with ltd and the bridge contractor to coordinate passage of the loads over the bridge in between phases of the construction project when it is safe to do so. See, e.g., AR, ltd For this leg of the trip, Emmert identified twenty three pull offs-eighteen primary and five secondary-along this 38.8 mile route. I5-Minute Rule Delay Spreadsheets, AR at ITD There will be five flagger stations at regular intervals along the route. Id I Of those eleven segments, four segments have secondary pull offs between the primary pull offs, and three segments are partially or entirely three or more lanes wide. Id Thus, only four of the over seventy-eight segments of the trip are projected to take more than ten minutes and do not contain an area where the load can be circumvented. (Day 3, milepost 125, Day 4, mileposts 153.8, 160, 174.2)

17 For the second leg of the trip, during which the transport will travel from Orofino to Kooskia, Emmert identified twenty-four pull offs-nineteen primary and five secondary-along this 34.9 mile route. Id. at ITD00291, 295. On this leg, only one segment is projected to take more than ten minutes. Id. That segment covers U.S. 12 from just outside of Orofino at milepost 38.8 to milepost 46. Id. at ITD Of the 7.2 miles that makes up that segment, the road is four lanes wide for 4.3 miles. Id. Thus, no segment of this leg is projected to take more than ten minutes and does not have a significant portion where the road is not four lanes. Id. There will be eight flagger stations at regular intervals along the route. Id. On the third leg of the trip, the load will travel from Kooskia to milepost 127, approximately halfway between Kooskia and the Montana border. Id. at ITD Emmert identified twenty-one pull offs-fourteen primary and seven secondary-along this 53.1 mile route. Id. at ITD00292, 295. The leg will include only four segments projected to take more than ten minutes. Id. (segments beginning at pull offs 8, 9, 10, and 13), but ofthose three contain a secondary pull off at approximately the halfway mark of the segment. Id. at ITD00292, (segments beginning at pull offs 8, 9, 10 contain secondary pull offs at mileposts 100, 106.7, and 112.1, respectively). Thus, there is only one segments of this leg of the route that is projected to take over ten minutes and does not have a secondary pull off. Id. at ITD00292 (segment beginning at pull off 13). There will be eleven flagger stations at regular intervals along the route. Id. After the third night of the trip for each shipment, the load will have passed all the properties of Laughy, Hendrickson, and Grubb. Id. at ITD

18 B. Safety is the Benchmark of the Transportation Plan "Emmert International's commitment to safety is the benchmark of this plan." Risk Assessment and Management, AR, ITD Among the key elements of the plan to ensure safety are: Use of well maintained, modem equipment. Pre-job and daily inspection and preventative maintenance checks of all equipment before the start of work. Continuous coordination of the intended work schedule including direct contact with all involved parties, including police, utilities and others, to ensure that all are prepared for the load to move with the minimum possible impact. Pre-work daily meetings, including the review of the Job Safety Analysis (JSA), Tool Box Talks, Management of Change procedures and individual work assignments and tasks for the day. Review and implementation of communication protocols, such as radios, line of sight hand signals, etc. Selection of sub contractors who have a history of safe operations[ and] knowledge of the local communities... Identification of medical facilities at key locations on the route. Communication with local, reliable meteorological services both prior to the start of and during the operations. Id. at ITD Emmert identified risks and went to exceptional lengths to minimize them. See, e.g., State of Idaho Contingency Planning, AR, ITD Emmert examined the proposed transport thoroughly and openly identified the potential risks, breaking them into three general categories: (1) structural failure of the road; (2) structural failure ofthe load and/or the transport saddles used to support the load; and (3) structural and/or mechanical failure of the transporter. Id. To

19 mitigate the risks, the "road has been subjected to detailed and extensive design checks based on the construction plans supported by condition surveys;" "[t]he structural integrity of the loads... have been rigorously checked by competent, licensed engineers...; and the transporters to be used for the operation have again be[ en] the subject of extensive design checks" and "are regularly inspected for any structural defects before and during the actual transports." Id at ITD Additionally, the coke drums will be carried approximately eight inches from the road resulting in "in a very high stability and also minimize[ing] any potential for the load to overturn as it will contact the road first." Id Further minimizing any risk, the "systems are designed so that any hydraulic suspension failures will not endanger the load and the pneumatic brake systems are all fail safe." Id "A large degree of redundancy is also built into the system" to further ensure the safe and successful transport of the drums. Id. For example, "[e]very axle in the system has brakes fitted to ensure rapid and controlled braking." Id For another example, the "load will be controlled by 2 trucks each of which has the capacity to move the load transporter on its own." Id Thus, even if one truck failed, the other would be able to move the load at least to a point safely off the road. In any case, "all service equipment, materials and spare parts" will be traveling with the trucks to expedite any needed repairs Land Transport Plan, AR, ITDOOl16. To ensure coordination, "[b]efore the start of each working period a crew meeting [will be] held where the intended operations are fully discussed and reviewed," including "any particular areas on the route where additional caution is required. These areas are always ~ 13 -

20 negotiated at low speeds to again decrease significantly the limited potential for any incident to occur." Risk Assessment and Management, AR, ITD Ultimately, "these precautions and checks are done and verified to eliminate any risk of a catastrophic failure which may result in the load falling." Id Thus, it is "extremely unlikely" that it will be necessary to recover the load. Id Still, out of an abundance of caution Emmert identified numerous ways to address that extremely unlikely situation as well. Id C. ltd Required Enhanced Safety Measures in the Transportation Plan Throughout the planning and permit application process, ltd stressed to Emmert that its primary concern was to "minimize inconvenience and maximize safety to [Idaho] motorists." See, e.g., AR, ITD Indeed, as late as July 2010, ltd was posing specific and direct questions to Emmert about numerous aspects of the shipments. See AR, ITD During the course of the planning ltd sought and received answers from Emmert to specific questions about, for just a few examples, the use of cranes should a load somehow go into the river, id; about whether certain areas could be used as pull offs, id at ITD00307; about whether specific segments of the trip could be traveled in under fifteen minutes, id at ITD ; for detailed information about how "helper dollies" would be used to aid the load across certain bridges, id at ITD00309; to demonstrate adherence to the fifteen minute rule, id at ITD00318; for a specific contingency plan for breakdowns or malfunctions, id; how Emmert would handle an emergency for a non-emergency vehicle, id at ITD00319; and to ensure the flagging crews have one to one communications with the drivers, id - 14-

21 ltd also directed a question to Emmert about whether they had studied the viability of moving the drums from other seaports. AR,ITD Emmert provided a thorough response that outlined numerous other ports that were studied. Id. Emmert looked at Houston, New Orleans, the Port of Catoosa in Oklahoma, and Duluth or Minneapolis/St. Paul, MN to determine the feasibility of transporting the drums from those ports "in one piece or cut into two sections." Id. The study determined that none of those ports were viable given physical obstacles, the inability to secure permits, load weights, and travel through highly congested areas. Id. D. Laugby Lawsuit Laughy and Hendrickson own property along U.S. 12 and operate a book publishing company and a decorated apparel business. R. Vol. I, p According to his unsworn affidavit, Grubb has an ownership interest in a lodge located near U.S. 12 and a company that sometimes takes customers on trips down the Lochsa River which is located near U.S. 12. R. Vol. I, pp , ~~ 3-4. The Laughy Group filed suit to prevent the four shipments to the Billings refinery. Id. at p. 1, ~ 1. Much of the complaint filed by the Laughy Group references proposed shipments on U.S. 12 by entities other than ConocoPhillips and references supposed plans by the State of Idaho to increase commercial usage of U.S. 12; assertions that have nothing to do with ConocoPhillips and its need to repair is Billings refinery. See, e.g., R. Vol. I., pp. 2-3, ~~ 3,5, ~~ Issues Presented On Appeal ConocoPhillips' appeal presents five main issues:

22 1. Prejudice to a Substantial Right. To prevail in a challenge to an agency permit decision, a petitioner must first show that the agency erred in a manner specified in I.C (3), and then must show that a substantial right of the petitioner has been prejudiced under (4). Here, the Laughy Group did not allege, and the district court did not find, that a substantial right of any member of the Laughy Group had been prejudiced. Did the Laughy Group establish prejudice to a substantial right? 2. Deference Regarding ltd Regulations. Did the court err in failing to give deference to ltd's interpretation of its own regulations at ldapa and ldapa ? 3. Primary Concern and Necessity. ltd must give primary concern to the safety and convenience of the general public, and predicate overlegal permit issuance on a reasonable determination of necessity. ltd evaluated the detailed traffic control plan and considered record comments to address the safety and convenience of the general public, and reviewed that plan and the ConocoPhillips application materials to determine the necessity of the proposed shipment. Was ltd's determination supported by substantial evidence? 4. Exhaustion. Idaho law requires a challenger to a state agency's permit decision to exhaust all administrative remedies prior to judicial review, unless those remedies would be inadequate. ltd's overlegal permit and oversize load regulations provide for administrative appeals and agency petitions to stay interlocutory or final permit decisions. The Laughy Group never invoked those administrative processes before ltd. Did the Laughy Group exhaust its administrative remedies? - 16-

23 5. Attorney Fees on Appeal. Idaho law directs the award of attorney fees to the prevailing party in litigation involving a state agency if the non-prevailing party acted without a reasonable basis in fact or law, or brought or defended the action frivolously, unreasonably, or without foundation. The record facts supported ltd's decision to issue the pennits to ConocoPhillips, and the Laughy Group's legal arguments are premised on a misreading of the controlling regulations. Is ConocoPhillips entitled to attorney fees on appeal? Summary Of Argument The pennits should be upheld as the district court failed to make the requisite finding of prejudice to a substantial right pursuant to I.C (4). The district court also failed to defer to ltd's reasonable construction ofidapa and, in tum, imposed a standard on ltd that is inconsistent with the overall statutory scheme and is not supported by the language of the regulations. There is substantial evidence that ltd gave "primary" concern to public safety and convenience; the district court failed to properly apply the substantial evidence standard and ignored evidence in the administrative record. There is also substantial evidence that ltd properly considered "necessity;" the district court failed to properly defer to ltd's interpretation of "necessity," improperly engaged in second-guessing ltd's action, and misconstrued the "substantial evidence" standard. Finally, the Laughy Group failed to exhaust administrative remedies, thus depriving the district court of jurisdiction to hear the Petition for Review

24 Argument A. Standard Of Review In reviewing an agency's findings of fact, the court may not substitute its judgment for that of the agency as to the weight of the evidence. Le (1); Lane Ranch P'ship v. City of Sun Valley, 144 Idaho 584, 588, 166 P.3d 374, 378 (2007). Even where there is conflicting evidence before the agency, an agency's factual determinations are binding on the reviewing court unless they are clearly erroneous. Terrazas v. Blaine County, 147 Idaho 193, 197,207 P.3d 169, 173 (2009) (citing Castaneda v. Brighton Corp., 130 Idaho 923, 926, 950 P.2d 1262, 1265 (1998». A person aggrieved by a state agency's decision may seek judicial review of that decision under Idaho Administrative Procedures Act ("AP A"), provided that the pre-requisites for obtaining such review are satisfied. See Le When a district court acts in its appellate capacity on a petition for review of agency action under IDAP A, this court reviews the agency record independently of the district court's decision. Sons & Daughters of Idaho, Inc. v. Idaho Lottery Comm 'n, 144 Idaho 23, 26, 156 P.3d 524, 527 (2007) (citing Cooper v. Bd. of Prof Discipline of Idaho State Bd. ofmed., 134 Idaho 449, 454, 4 P.3d 561, 566 (2000)). The standard of judicial review of an agency action is governed by the AP A. See Le (3). A reviewing court must uphold an agency's order unless the agency's decision (1) violates statutory or constitutional provisions; (2) exceeds the agency's statutory authority; (3) is made upon unlawful procedure; (4) is not supported by substantial evidence in the record; or (5) is arbitrary, capricious, or an abuse of discretion. Kuna Boxing Club, Inc. v. Idaho Lottery

25 Comm 'n, 149 Idaho 94,97,233 P.3d 25,28 (2009) (citing Sons and Daughters, 144 Idaho at 26, 156 P.3d at 527); I.C (3)V The party challenging an agency's pennit issuance decision must first show that the agency erred in a manner specified in (3), and second that the challenging party's substantial rights have been prejudiced. I.C (4); Wohrle v. Kootenai County, 147 Idaho 267, 276, 207 P.3d 998, 1007 (2009). The Supreme Court exercises free review of questions of law, although agencies are sometimes entitled to deference on questions of statutory construction. Because ltd has been entrusted with administration of the highway size and weight limitations statutes, this Court will defer to ITD's interpretation of those statutes in implementing regulations so long as that interpretation is reasonable and not contrary to the express language of the statute. Kuna Boxing Club, 149 Idaho 94, 233 P.3d at 28 (citing Sons and Daughters, 144 Idaho at 26, 156 P.3d at 527, and J.R. Simp/ot Co., Inc. v. Idaho State Tax Comm 'n, 120 Idaho 849, 862, 820 P.2d 1206, 1219 (1991». Consistent with this standard of review, "the ultimate responsibility to construe legislative language to detennine the law" rests with the judiciary, and the underlying consideration whether to grant such deference to an agency's interpretation is to ascertain and give effect to legislative intent. Kuna Boxing Club, 149, Idaho 94, 233 P.3d at 28 (citing Mason v. Donnelly Club, 135 Idaho 581, 583,21 P.3d 903,905 (2001); Simplot, 120 Idaho at , 2 In its opening brief, ltd urges the application ofi.c (2) as the appropriate standard of review, which does not include the "not supported by substantial evidence in the record" standard. ConocoPhillips concurs in ltd's argument on this point, but in this brief applies the (3) standard to the administrative record and facts to demonstrate for the court how that standard would apply here and also compels reversal of the district court's decision should this Court detennine that (3) is the applicable standard

26 820 P.2d at ). Accordingly, ITD's construction of the overlegallimit statutes and regulations is entitled to deference to the extent supported by the rationales for such deference. Kuna Boxing Club, 149 Idaho 94, 233 P.3d at In determining whether an agency's determination was arbitrary and capricious, an agency is not required to discuss all evidence in the administrative record and to explain the information that runs counter to its ultimate determination. It is the agency's "province to decide the weight to be given the various items of evidence." American Lung Ass 'n of Idaho/Nevada v. State Dep 't of Agriculture, 142 Idaho 544, 549, 130 P.2d 1082, 1087 (2006). B. ltd's Issuance of the Permits Should Be Affirmed As There Was No Finding Of Prejudice To Substantial Rights Under I.C (4) The permits should be affirmed as the district court failed to find that substantial rights held by the Laughy Group were prejudiced. "The party challenging the decision of [ an agency] must not only demonstrate that the [agency] erred in a manner specified in I.C (3) but must also show that its substantial rights have been prejudiced. I.C (4)." Kirk- Hughes Dev. v. Kootenai County Bd. of County Comm 'rs, 2010 WL , * 3 (Idaho June 2, 2010). Thus, "[i]t is the burden of the party contesting the [agency] action... to first illustrate how the [agency] erred in a manner specified under I.C , and then establish that a substantial right has been prejudiced." Taylor v. Canyon County Bd. ofcomm'rs, 147 Idaho 424,431,210 P.3d 532, 539 (2009). This Court has affirmed agency action where the challenging party failed to articulate fully a specific substantial right and explain how that right was prejudiced by the contested - 20-

27 administrative action. See Kirk-Hughes, 2010 WL In Kirk-Hughes, a developer appealed denial of his application for approval of a proposed development, contending, among other things, that his due process rights were violated. Id. at * 1, * 3. The developer also asserted in his brief that "[s]ubstantial rights of [the developer] as a landowner have been prejudiced, and [the developer's] due process rights have been violated." Id. at *3. The Court found this statement regarding substantial rights to be "conclusory and without more,... insufficient" to even raise the issue. Id. Thus, "[b]ecause [the developer] did not appeal the decision of the district court [regarding substantial rights], we need not review the remaining issues." Id. In holding that it "need not review the remaining issues," the Court in Kirk-Hughes made clear that when a challenger neglects his burden pursuant to I.C (4), the agency action must be affirmed. Here, the absence of a district court finding regarding I.C (4) confirms the Laughy Group's failure to meet its burden to show prejudice to a substantial right. The Laughy Group failed even make the type of conclusory assertion that was found insufficient in Kirk- Hughes. In fact, I.C (4) is not even mentioned in the Petition for Judicial Review. See R. Vol. I, p The same rules that ended the challenge in the Kirk-Hughes case apply to the Laughy Group. Idaho Rule of Civil Procedure 84 "provides the procedure for the district court's judicial review" of an administrative action. Idaho R. Civ. P. 84(a). "Any procedure for judicial review 3 Even the Laughy Group's briefs to the district court do not address their burden under Idaho Code (4). Id. at pp

28 not specified or covered by [Rule 84] shall be in accordance with the appropriate rule of the Idaho Appellate Rules to the extent the same is not contrary to this Rule." Id. at 84(r).4 The Laughy Group's Petition for Judicial Review should be denied and the resulting order from the district court can and should be reversed on this ground. C. The District Court Wrongly Failed to Defer To ltd's Interpretation of IDAPA ConocoPhiIlips incorporates by reference ltd's Appellate Brief, IV C-D dated September 7,2010 at pp "It is well established 'that an agency's construction of its own regulations is entitled to substantial deference. '" Martin v. Occupational Safety and Health Review Commission, 499 U.S. 144, 111 S.Ct. 1171, 113 L.Ed.2d 117 (1991); see also Duncan v. State Bd. of Accountancy, 149 Idaho 1, --,232 PJd 322,325 (2010) ("Normally, this Court defers to the agency interpretation of statutes and rules."); Angstman v. Ctiy of Boise, 128 Idaho 575, 917 P.2d 409 (Ct. App. 1996) ("[G]reat weight should be given to an agency's interpretation of its own rules. "). In Idaho, a four-pronged test ("Simplot Factors") has been established to determine the appropriate level of deference for an agency interpretation of a statute or rule. See Duncan, 149 Idaho at --, 232 P.d at 325 (laying out that test and the rationale underlying deference to agency 4 Rule 84 provides in pertinent part, "[b ]riefs and memoranda shall be in the form and arrangement and filed and served within the time provided by rules for appeals to the Supreme Court." Idaho R. Civ. P. 84(P). Rule 84 does not specify the contents of the brief and thus leaves that to Idaho Appellate Rules, which states that the argument section of the Appellant's Brief "shall contain the contentions of the appellant with respect to the issues presented on appeal, the reasons therefor, with citations to the authorities, statutes and parts of the transcript and record relied upon." Idaho App. R. 35(a)(6)

29 interpretation ofits rules). Where that test is met, the agency's interpretation is entitled to great weight and deference. Duncan, supra; Simplot v. Idaho State Tax Com 'n, 120 Idaho 849, ,820 P.2d 1206, (1990). Here, the district did not apply the appropriate test. Although the test was referred to several times during oral argument, the district court ignored the test when drafting its opinion. For the reasons set forth in ltd's Appellate Brief, deference should be given to ltd's interpretations of its regulations and the district court's ruling should be reversed. D. ltd's Primary Concern With Public Safety and Convenience is Supported By Substantial Evidence The administrative record contains substantial evidence that ltd made "public safety and convenience" a "primary concern." Throughout the process, ITD required changes to the transportation plan to address this primary concern. Most importantly, ltd required a final transportation plan which focused on safety and minimizing public inconvenience. See, e.g., AR, ITD In reviewing the issue, the district court erred. The district court disregarded I.C (1) which expressly prohibits a district court from substituting its judgment for that of the agency. Further, while the district court used the phrase "substantial evidence," the district court did not apply the concept of "substantial evidence" recognized by this Court. This Court has held that "substantial evidence" need not be uncontradicted or lead to a certain conclusion. Chisholm v. Idaho Dept. of Water Resources, 142 Idaho 159, 164, 125 P.3d 515, 520 (2005). In contrast, the district court applied its own, different "substantial evidence" test which turned on

30 whether the district court felt that all opposition comments from the public regarding potential emergency situations had been "controverted" to the satisfaction of the district court's judgment. Moreover, the district court simply ignored portions of the administrative record. 1. A District Court Is Not To Substitute Its Judgment. The Laughy Group seeks review of the permits subject to I.C which in part provides, "[ t ]he court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions offact." I.C (1). In turn, when considering whether the Laughy Group satisfied its burden pursuant to I.C (3), the district court should not substitute its judgment for that ofitd. Id; see also In re: App. of Ackerman, 127 Idaho 495, ,903 P.2d 84,85-86 (1995) ("A reviewing court may not substitute its judgment for that of the administrative agency on questions of fact, and will uphold an agency's finding of fact if supported by substantial and competent evidence."); Cooper, 134 Idaho at 4544 P.3d at 566 ("The Court will defer to the agency's findings of fact unless those findings are clearly erroneous and unsupported by evidence in the record."). 2. Substantial Evidence Need Not Be Uncontradicted In addition to mandating that the district court defer to the agency's judgment, I.C mandates that the agency decision will be affirmed unless the agency decision is "not supported by substantial evidence on the record as a whole." I.C (3). When conflicting evidence is presented, the agency's findings are binding on this Court as long as they are supported by substantial and competent evidence, regardless of whether we might have reached a different conclusion. Substantial and competent evidence is relevant evidence that a reasonable mind might accept to support a conclusion. Substantial evidence is less than a preponderance of evidence, but more than a mere scintilla. Substantial evidence need not be - 24-

31 uncontradicted, nor does it need to necessarily lead to a certain conclusion; it need only be of such sufficient quantity and probative value that reasonable minds could reach the same conclusion as the fact finder. Chisholm, 142 Idaho at 164, 125 P.3d at 520 (internal citations and quotations omitted); see also, e.g., Spencer v. Kootenai County, 145 Idaho 448, 456, 180 P.3d 487, 495 (2008); Bennett v. State, Dept. ojtransp., 147 Idaho 141, 143,206 P.3d 505,507 (et. App. 2009). 3. The Administrative Record Documents That Safety and Convenience Were ltd's Primary Concern ltd expressly noted that in considering the overjegal permit, it gave "primary concern" to the "safety and convenience of the general public[.]" MOD, AR, ITD ltd specifically noted the following related to public safety and convenience: The actual movement and transport of the loads will occur only during overnight hours between 10 p.m. and 6 a.m. to minimize traffic disruption. Specific transportation turn-outs and secondary back up locations have been identified throughout the course of the route to prevent traffic delays greater than 15 minutes. Multiple axles are to be used to spread the weight of the load per ltd requirements in order to protect the integrity of Idaho roads and bridges. The coke drum equipment that is to be transported is in new condition, does not have chemical or hydrocarbon inventory, and consists of new, clean carbon steel alloys. A full complement of support vehicles providing replacement parts and maintenance tools will accompany each transport vehicle. During the transport of the drums, Idaho utility service interruptions for Idaho customers are not expected. No impact to the Idaho environment or scenery will occur, since the transports will make use of existing Idaho infrastructure with no road alterations being required

32 To ensure safety and stability of the loads along the proposed U.S. 12 route, the maximum speed of the loads will be 25 mph, and they will average 15 mph. State police escorts and traffic-control contractors will maintain emergency vehicle access throughout the route. Global Positioning Systems (GPS) and satellite communications will also be used to provide continuous location information. Key Emmert personnel and a lead flagger/escort will be equipped with the GPS equipment, and it will be available to others as necessary. This system will ensure a direct contact is maintained with the loads at all times and provide additional safety protections for the traveling public and the transporters. Emmert recognized that it was a significant concern to accommodate emergency vehicle traffic. In order to address that issue and allow for safe and unhindered travel for emergency vehicles, Emmert will use police escorts and lead flaggers/escort to accompany the loads and monitory the emergency communications between the various jurisdictions. Emmert will then be aware of any emergency vehicles that may need to pass through the transport route with sufficient advance time for the transport vehicles to reach a pull-out before the emergency vehicle arrives. The emergency vehicles would then be able to pass through the route unimpeded. Emergency vehicle access will be maintained throughout the entire route through the continual communication between Emmert personnel on each vehicle, the Emmert driver, state police, and the lead flagger/escort. Emmert will treat non-emergency vehicles in the same fashion. If a nonemergency vehicle has an emergency situation and needs to pass, Emmert will make the necessary accommodations to allow the vehicle to pass. The Department required Emmert International to enter a Hold Harmless Agreement and to provide a $10,000,000 insurance policy. MOD, AR, ltd Further, the administrative record contains detailed, substantial evidence reflecting ltd's review of the safety and convenience of the general public when considering the proposed overlegal movements as required by IDAPA See Exhibit A to this Brief - 26-

33 (attached hereto). Accordingly, the record clearly contains substantial evidence that public safety and convenience were ltd's primary concern. 4. The District Court Did Not Apply the Substantial Evidence Standard Despite the overwhelming evidence in the record related to convenience and safety, the district court held there was "no substantial evidence." Notably, at no point in its Opinion does the district court define "substantial evidence" or cite to any authority regarding the concept. Rather, the district court creates its own standard for "substantial evidence"; a standard that appears to turn on whether an issue raised in a public comment is addressed in a manner suitable to the district court. See, e.g., CR, 208. The standard the district court applies is simply incorrect. See Chisholm, 142 Idaho at 159. Moreover, the district court cites three examples that it contends relate to safety issues that were not addressed by ltd: (1) potential blockage of U.S. 12, (2) need for a private vehicle to get around the transport in an emergency, and (3) public's ability to recover against Emmert or ConocoPhillips for personal injury. CR Even under the district court's construction of "substantial evidence", ltd's action should be affirmed. ltd addressed or had Emmert address each of the issues cited by the district court. The public comments related to blockage of U.S. 12 were addressed by Emmert. State of Idaho Highway Contingency Plan, AR, ITD , ITD Emmert responded by pointing out the many steps taken to prevent such an event, broadly discussed how such an event would be addressed, and pointed out procedures within Emmert's structure to promptly respond to and resolve such problems. Id

34 ltd considered the issue of private vehicles needing to pass the transport in an emergency. See, e.g. AR, ITD00319 (containing Emmert's response to an ltd inquiry on the issue); see a/so, e.g., id. at ITD (describing in minute detail the route to be traveled, one-hundred-two pull off areas where traffic can pass, and thirty-nine flagger stations); id. at AR, JTDOO (describing multiple communication methods for flaggers to alert the load of approaching non-emergency vehicle with an emergency so the load can get to the next available pull off and wait for the vehicle to pass). Likewise, ltd considered and addressed the issue ofa private individual's claim for personal injury. The certificate of insurance that ltd required from Emmert reflects significant coverage for personal injury. Hold Harmless Agreement, AR, ITD (Coverages, Limits (right side), "Personal & Adv. Injury, "$1,000,000"). While the district court raises the issue of personal jurisdiction over Emmert and ConocoPhillips, Idaho's statutes provide for jurisdiction over an entity wrongfully causing injury in Idaho. See, e.g., I.C ; Blimka v. My Web Wholesaler, LLC, 143 Idaho 723, 726, 152 P.3d 594,597 (2007) (referring to I.C as "Idaho's long-arm statute" and calling it "remedial legislation designed to provide a forum for Idaho residents that should be liberally construed to effectuate that purpose"). In short, even if one were to adopt the district court's construction of "substantial evidence," the permits should be affirmed. ltd addressed each of the issues raised by the district court regarding public safety and convenience

35 E. ltd Properly Made A Reasonable Determination of Necessity In relevant part, IDAPA states "[t]he Department shall, in each case, predicate the issuance of an overlegal permit on a reasonable determination of the necessity... of the proposed movement." The same substantial evidence standard articulated by this court and laid out above applies to ltd's determination of necessity. In its MOD, ltd considered the necessity ofthe over-legal permit and found, "[t]he extreme dimensions of the drums precluded the possibility of shipping the drums by rail, leaving only barge and truck options. The only viable option for transport of the coke drums to Billings, Montana, is from Lewiston, Idaho-the nearest navigable water to Billings-along U.S. 12." MOD, AR, ITD There was substantial evidence on the record supporting ltd's conclusion. The administrative record reflects that a feasibility study oftransporting the drums to the Billings refinery was performed by Emmert beginning in AR, ITD That study examined the feasibility of land transportation of the drums in "one piece or cut into two sections" from numerous seaports including Houston, Duluth or Minneapolis/St. Paul, New Orleans, and Catoosa, OK. AR,ITD The study results were articulated with detail, including alternatives considered and reasons why those alternatives were not feasible. Id. The study ultimately determined that ground transportation permits could not be obtained from any of these ports due to numerous reasons including obstructions that could not be removed or avoided, weight restrictions on various roads and bridges, and having to pass through highly congested - 29-

36 areas. Id. The detailed description of the study and its findings is certainly more than a scintilla of evidence. Furthermore, in recognizing that Lewiston is at "the nearest navigable water to Billings," ltd expressly gave consideration to the necessity to get the drums to the refinery with as little ground transport as possible. MOD, AR, ltd The entire administrative record is substantial evidence demonstrating that ground transportation is a large undertaking that requires the dedication of significant, time, money, and resources. See, e.g., AR, ltdoooi There is substantial evidence to support the necessity of limiting ground transport of the drums as much as possible. And in fact, the MOD's opening paragraph also recognizes ConocoPhillips' private necessity for "operational reliability of the refinery," which without the new drums will be faced with "safety risk, potential interruptions in the refinery's operations, and increased maintenance costs." Id. at ITD There is substantial evidence on the record to support this finding as well. See, e.g., AR, ITD

37 Indeed there was public comment in the record asserting an alternative route should be employed. S Although there is nothing in the record to indicate that these public comments provide viable alternatives. However, whether the record contains citizens comments proposing alternative routes is not the applicable test. "When conflicting evidence is presented, the agency's findings are binding on this Court as long as they are supported by substantial and competent evidence, regardless of whether we might have reached a different conclusion." Chisholm, 142 Idaho at 164, 125 P.3d at 520. That is the case here. ltd examined the conflicting evidence and relied upon substantial competent evidence to reach its necessity determination. That determination must therefore be upheld. The district court recognized that there was evidence in the record supporting ltd's determination of necessity, but wrongly found that evidence "not substantial" because the district court wrongly believed the study "apparently assumed the drums would be transported in one piece." R. Vol. I, p Based on this mistaken belief, the district court found that ltd's finding of necessity lacked "evidence in the record to support it." Id However, the document the district court cites plainly states that the study "was based on over land transport from: 5 Many of those comments do not address the shipments at issue in this case but instead suggest shipments by Imperial Oil should travel through Canada. See e.g., AR, ITD ("Imperial Oil has many other transportation alternatives [including] Canadian highways"); (referring to "Kearl Module Transports" and "207 fully loaded trucks"); (suggesting "equipment largely benefiting Canada" go through Canada"); 1966 (suggests Canada as an alternative route for Imperial Oil shipments). Some stated an alternative route should be used but did not state which one, id at ITDOOI805, and yet another suggested an alternative route through Boise and then to Montana via the interstate, id at ITD And Plaintiffs' counsel submitted a comment on July 14, 2010 that suggested the loads go through the Gulf of Mexico or that the coke drums be constructed on site. AR,ITD There is no evidence in the record that any of these are viable alternatives

38 Houston, New Orleans, Port of Catoosa (OK), Duluth or Minneapolis/St. Paul in one piece or cut into two sections." See AR, ITD00744 (emphasis added). The basis of the district court's reversal ofitd's necessity finding is his erroneous finding that the study described in the administrative record "assumed the drums would be transported in one piece." Accordingly, the district court's reasoning was flawed. F. The Laughy Group Wrongly Implies That U.S. 12 Should Not Be Used For Commercial Purposes U.S. 12 opened in 1961, prior to the designation of the Middle Fork Clearwater River, which includes the Lochsa River, under the Federal Wild and Scenic Rivers Act in See, 16 U.S.C. 1274(a)(1); Pub. L. No , 3 (1968). The Middle Fork of the Clearwater from Kooskia upstream to Lowell is designated as a "recreational" river under the Wild and Scenic Rivers Act, as is the Lochsa River from Lowell upstream to the Powell Ranger Station. See, e.g., Northwest Interpretive Association (in cooperation with Clearwater National Forest), Lochsa River Floating Guide (1994) (available at 1 /clearwaternisitorinfo/ Assets/pdfs/Lochsa_ River_Guide. pdf). Under the Wild and Scenic Rivers Act, a "recreational" river is the lowest level of classification and administration (the other higher levels being "wild" or "scenic"),6 and denotes a river or section of river that is "readily accessible by road or railroad, that may have some development along [its] shorelines, and that may have undergone some impoundment or 6 See generally Murray Feldman, William McLaughlin, and Jennifer Hill, Learning to Manage Our Wild and Scenic River System, 20 Nat. Resources & Env't 10, 10 (2005) ("The idea [behind designation] is not to halt development and use of a river [ corridor]... Uses compatible with the management goals of a particular river are allowed; change is expected to happen.")

39 diversion in the past." 16 U.S.C. 1273(b)(3). Under the National Parks Service and U.S. Forest Service Final Revised Wild and Scenic Rivers Act Guidelines for Eligibility, Classification and Management of River Areas, recreational rivers may "contain existing parallel roads or railroads in close proximity to one or both banks of the river as well as bridge crossings and roads forwarding or ending at the river." 47 Fed. Reg , (Sept. 7, 1982). Also, lands along the shores of recreational rivers "may have been developed for the full range of agricultural and forestry uses," and "may include some residential, commercial or similar development." Id. at There may also be existing impoundments and other modifications "of the waterway having an impact on the river area," id. at 39458, including "low dams, diversion works, riprap and other minor structures." Id. Thus, as a legal matter, nothing in the Wild and Scenic Rivers Act or the designation of the Middle Fork of the Clearwater or Lochsa Rivers as "recreational" rivers precludes the use of the pre-existing U.S. 12 corridor for transportation of the loads permitted by ltd here. U.S. 12 is part of the National Scenic Byways Program administered by the Federal Highway Administration ("FHWA") of the U.S. Department of Transportation. In 2005, FHWA designated the route as an "All-American Road." See The Scenic Byway designation program requires that the designated roads continue to accommodate the basic transportation functions for different modes of vehicle travel and commerce. See, e.g., 60 Fed. Reg , (May 18, 1995) (FHW A interim policy for management of highways designated under National Scenic Byways Program). Thus, FHWA's National Scenic Byways Program policies-which are not - 33-

40 binding regulations or legal requirements-do not preclude or regulate the use of U.S. 12 for commerce and transportation purposes, including th~ ConocoPhillips' shipments permitted by ltd here. Control of the size and weight limitations, and exceptions thereto, remains the exclusive discretionary province of the Idaho Transportation Board and ltd, consistent with any applicable federal requirements, none of which has been identified by the Laughy Group or the district court here. The Laughy Group in its district court briefing pointed out that areas along the U.S. 12 corridor were visited by the Lewis and Clark Corp. of Discovery Expedition, see AR, ITD00771, and the Byways description on the National Scenic Byways Program webpage notes that the "Lewis and Clark Expedition journeyed through North~Central Idaho 200 years ago in search of the Northwest Passage," Nonetheless, the Laughy Group overlooks that the principal purpose of the Lewis & Clark's Corp. of Discovery Expedition was to identify and locate a water route "across this continent for the purposes of commerce." Ltr. from Pres. Jefferson to Capt. Merriwether Lewis (June 20, 1803)(transcript available at should not be surprising that Emmert and ltd identified this same route of passage in the U. S. 12 corridor as a feasible route for commerce, consistent with the Lewis and Clark party's initial identification of the waterways potential "for the purposes of commerce" in

41 G. The Laughy Group Failed To Exhaust the Available Administrative Remedies "As a general rule, a party must exhaust administrative remedies before resorting to the courts to challenge the validity of administrative acts." Lochsa Falls, L.L. C. v. State of Idaho, Idaho Transp. Bd., 147 Idaho 232, 237, 207 P.3d 963,968 (2009) (quoting KMST, LLC v. County of Ada, 138 Idaho 577, 583, 67 P.3d 56,62 (2003». The APA requires an exhaustion of the full gamut of administrative remedies before judicial review may be sought. I.C ; Lochsa Falls, 147 Idaho at 237,207 P.3d at 968; Westway Constr. Inc. v. Idaho Transp. Dep't, 139 Idaho 107, Ill, 73 P.3d 721, 725 (2003). Under the AP A, a "person is not entitled to judicial review of an agency action until that person has exhausted all administrative remedies required in this chapter." I.C However, a "preliminary, procedural, or intermediate agency action or ruling is immediately reviewable if review of the final agency action would not provide an adequate remedy." Id (2). Here, the applicable ltd overlegal permit regulations provide an administrative appeal process, including a process to petition the ltd for a stay of any interlocutory or final permit decision. 7 The Laughy Group declined to invoke or take advantage of that process, and did not establish that ltd's administrative appeal process would not provide an adequate remedy. 7 See IDAPA (rules governing overlegal pemittee responsibility and travel restrictions); IDAPA (rules governing oversize permits for non-reducible vehicles and/or loads); IDAPA (Idaho rules of administrative procedure of the Attorney General, referenced as the rules for administrative appeals in ltd's overlegal permit rules and providing an administrative process for any "party or person affected by an order [Le. permit decision]" to "petition the agency to stay any order, whether interlocutory or final")

42 Instead, the Laughy Group merely asserted that the APA allowed for judicial review here and cited to I.C (2) concerning the availability of immediate review "if review of the final agency action would not provide an adequate remedy." See Laughy Sur-Reply on Motion for Disqualification at 4 (Aug. 19,2010); Mot. Rrg. Tr. p.8, LL. 17-p.9, L.9. But Laughy never explains why it could not pursue or exhaust the available administrative remedies before ltd or why those procedures "would not provide an adequate remedy." Given the jurisdictional significance and statutory requirement to exhaust administrative remedies, Laughy's conclusory assertion below is insufficient to establish that either the exhaustion requirement of (1) was satisfied or the exception for immediate review was applicable. Thus, by failing to invoke the available administrative appeal, stay, and review procedures, the Laughy Group failed to exhaust its administrative remedies, depriving the district court of jurisdiction and requiring that the judgment of the district court be vacated with directions to dismiss the petition for review. See, e.g., Westway, 139 Idaho at 115, 73 P.3d at 729. Request for Attorney Fees For the reasons detailed above, the Laughy Group did not present a reasonable basis in fact or law to challenge the overlegal transport permits here. Accordingly, ConocoPhillips is entitled to an award of attorney fees under I.C (1) for both this appeal and the district court litigation. I.C (1) requires the award of attorney fees to the prevailing party if the other party "acted without a reasonable basis in fact or law." See Bonner County v. Bonner County SherifJSearch & Rescue, Inc., 142 Idaho 788, 790, 134 P.3d 639,641 (2006)

43 ConocoPhillips is also entitled to an award of attorney fees under I.C for the attorney fees incurred in responding to the Laughy Group's petition for review and pursuing this appeal. The petition for review essentially asks the court to reweigh and reevaluate the evidence and second guess ITD's record-documented pennit-issuance detenninations. See Anderson v. Larsen, 136 Idaho 402, 408,34 P.3d 1085, 1091 (2001); Cowan v. Bd. ofcomm'rs, 143 Idaho 501,520, 148 P.3d 1247, 1266 (2006) (indicating that an administrative body would have been entitled to fees under I.C if the court had been left with an abiding belief that the review proceeding was brought or defended frivolously, unreasonably or without foundation); but see Allen v. Blaine County, 131 Idaho 138, ,953 P.2d 578, (1998) (questioning availability of attorney fees under I.C in an appeal from an agency decision)). Conclusion Based on the foregoing, ConocoPhillips requests that this Court reverse the district court's decision, deny the petition for review, and award attorney fees on appeal to ConocoPhillips. Respectfully submitted this 7th day of September, HOLLAND & HART LLP BY--#tJC-~~sL-~-==--..., Erik F. Stidham, of the finn Attorneys for Intervenor-Appellant Conoco-Phillips Company - 37-

44 CERTIFICATE OF SERVICE I hereby certify that on this 7th day of September 2010, I caused to be served two copies of this Brief in Support of Intervenor-Appellant ConocoPhillips Company by the method indicated below, and addressed to the following: Natalie J. Havlina Advocates for the West P.O. Box 1612 Boise, Idaho Karl Vogt Steven L. Olsen Lawrence G. Allen Deputy Attorneys General Idaho Department of Transportation 3311 W. State St. Boise, Idaho ~ D U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) D D ~ D U.S. Mail Hand Delivered Overnight Mail Telecopy (Fax) furho~har~~ JDOC

45 Exhibit A AR, ITD00003 Responses by Emmert International to ltd comments regarding emergency and nonemergency vehicles, communication between drivers and flaggers/escorts and transport weighing procedures. AR, ITD Transportation - General Risk Assessment - provided by Emmert International to ltd - detailing Potential Hazards, Consequences, Actions to Prevent, Responsibilities and Emergency Actions. AR, ITD State of Idaho Highway Contingency Planning - provided by Emmert to ltd - detailing in particular - recovery methods. AR, ITDOO Land Transport Plan in particular - ITDOO detailing emergency and non-emergency vehicle procedures - utilizing flaggers/pulling over/communications/police. AR, ITDOO Land Transport Plan discussing use of satellite phones and two way radios to effectively communicate between truck drivers, flaggers, civilian escorts and police. AR, ITD Emmert provided ltd with detailed route descriptions by day, complete with photographs, mileage, and notes on particular points of interest including turnouts and trouble areas. AR, ITD00258 Emmert International provided ltd with a detailed list of the turnout locations by mile marker to be used in the transportation. AR, ITD Emergency plan drawings depicting various methods of letting traffic through in the event of a breakdown. AR, ITD Emmert International provided ltd with a detailed 15 Minute Delay Rule Spreadsheet establishing each turnout to be used, the miles traveled, the location of the turnout and the estimated time to travel to each turnout. AR, ITD Emmert International provided ltd with a detailed Idaho Contact Sheet including the names and numbers of local law enforcement and medical resources. AR, ITD ltd provided Emmert International with comments concerning the potential need for and concerns regarding crane operation in the event that the load were to roll into the river. AR, ITD ltd requested that Emmert International address these concerns which Emmert International did. AR, ITD00317 ltd requested that Emmert International discuss how it would handle an emergency for non-emergency vehicle, i.e. private vehicle traveling for a medical emergency. AR, ITD00317 ltd requested that Emmert International detail a contingency plan for unforeseen problems that would detail what steps would be taken were the load to become disabled due to equipment malfunction or blocked or stuck because of roadway constraints. This request also asked for expected delay times to the traveling public. Emmert International responded at AR, ITD AR, ITD00620 ltd requested that Emmert International provide a contingency plan in Revision One of its overall plan. EXHIBIT A Page 1