USA – IDAHO Trends and Developments Contributed by: Steve Frinsko, Christopher Cook, Paul Street and Matthew Havili, Hawley Troxell
are limited and are also dependent upon their continu - ous use, where failure to continuously use a licence may result in forfeiture. Notably, under applicable Idaho law and related administrative rules, a change in the named licensee or the licensed premises may only be made by submitting an application for such change to ABC. Such changes are generally viewed as “transfers” – either of the licence’s ownership, or of the licensed premises location – and all such trans - fers are heavily regulated and subject to applicable restrictions. Transaction counsel should not assume that liquor licences are freely transferable. Water rights The Idaho Department of Water Resources (IDWR) regulates and manages water use in Idaho through a water right allocation and distribution process, based on filings made with the IDWR, the court, or both. In Idaho, decreed and licensed water rights are real property rights, whereas permitted water rights are generally deemed personal property. Any transac - tion involving real property located in Idaho where water use is a critical component warrants careful review. Notably, because water rights are generally considered a separate form of real property from the land itself, these rights (like other mineral rights) may generally be reserved, sold, or separated from the underlying land in connection with a real estate transfer. In other words, while water rights are gen - erally considered to “run with” or be “appurtenant” to the land, they do not automatically transfer with it absent appropriate language in the deed (or other conveyance document). Each water right is typically identified by a unique number issued by the IDWR. Each right is further defined by specific elements that establish the scope and limits of the right, including the source of water, the quantity, the priority date, the point of diversion, the purpose of use (eg, irrigation/ agricultural, industrial, domestic, and livestock), the period of use, and the place of use. These elements collectively determine how, where, and when water may be used and, therefore, directly impacts the value and usability of the underlying property. Transaction counsel should confirm the characteristics of any water right associated with the target property and evaluate whether the right aligns with the intended use of the property. Counsel should also consider wheth - er any proposed changes to the use or place of use
would require IDWR approval. Finally, because water rights must generally be put to continuous beneficial use, counsel should conduct due diligence to evaluate validity, including whether any periods of non-use may raise forfeiture concerns under applicable Idaho law. Non-compete agreements Idaho law expressly permits written agreements or covenants that protect an employer’s legitimate busi - ness interests and prohibit a key employee or key independent contractor from engaging in employment or a line of business that is in direct competition with the employer’s business after termination of employ - ment. In Idaho, there is a rebuttable presumption that an employee or independent contractor who is among the highest paid 5% of the employer’s employees or independent contractors is a “key employee” or a “key independent contractor.” Further, under Idaho Code § 44-2704, such agree - ments and covenants with key employees and key independent contractors are subject to several rebut - table presumptions. These include that: • a post-employment term of 18 months or less is reasonable; • a geographic area restricted to the geographic areas in which the key employee or key independ - ent contractor provided services or had a signifi - cant presence or influence is reasonable; and • restrictions as to the type of employment or line of business conducted by key employee or key con - tractor while working for the employer are reason - able. For key employees and key independent contractors, restrictions exceeding 18 months require considera - tion, in addition to employment or continued employ - ment. While Idaho law does not prohibit non-competition agreements in the sale of a business, it is important that any non-competition agreement or restrictive covenant in Idaho appropriately define the legitimate business interests that a business is protecting and
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