By Michael Howell
On Friday, October 17, the Montana District Court for Lewis and Clark County ordered Montana Department of Natural Resources and Conservation (DNRC) to close a loophole in the state’s water right permit rules that developers and other large water users were using to avoid the permitting process when drilling thousands of water wells for new subdivisions.
“The exempt well loophole has amounted to a giveaway of our limited water resources,” said Polly Rex of the Horse Creek Water Users, a plaintiff in the case. “Judge Sherlock really sent DNRC back to the drawing board with his order. [Plaintiffs] Katrin Chandler, Betty Lannen and I finally feel like someone in a position to do something actually did, issuing such a thoughtful and decisive order. We are very pleased.”
The plaintiffs argued that the clear legislative intent in passing the exempt well statute was to serve rural homeowners, ranchers, and farmers in Montana by allowing them the opportunity to drill a small well without obtaining a permit. It’s an approach that was intended for small, dispersed uses of water with little potential to impact existing rights.
But, they claimed, during Montana’s residential housing boom of the last two decades, developers seized on the “exempt-well” loophole to avoid obtaining permits for drilling water wells when converting agricultural lands into subdivisions. The effect on a groundwater aquifer, they argued, is immense; just one subdivision can drill hundreds of new water wells.
The plaintiffs pointed out that under the 1987 exempt well statute, a permit is not required for the appropriation of relatively small amounts of water. However, a combined appropriation by two or more wells from the same source that exceeds the minimum requirements does require a permit. But the legislature did not define the term “combined appropriation.”
As a result DNRC supplied a definition in its rule designed to implement the law. The rule originally stated that the ground water developments under consideration “need not be physically connected nor have a common distribution system to be considered a ‘combined appropriation’.” This rule was in effect until 1993 when the current rule was enacted that states “‘combined appropriation’ means an appropriation of water from the same aquifer by two or more wells that are physically manifold into the same system.”
It is this change that the plaintiffs considered was in conflict with the statute and the intent of the legislature in enacting the statute. They also argue that the current rule denies senior water right holders the ability to protect their rights against such junior appropriations.
Montana Department of Fish, Wildlife and Parks stepped into the fray in support of the plaintiffs as did various ranchers, Trout Unlimited, the Tongue River Water Users Association, Missoula County, Mountain Water Company of Missoula, and the Northern Plains Resource Council.
Intervening on behalf of DNRC in the case was the Montana Well Drillers Association, Montana Association of Realtors and the Montana Building Association.
FWP noted that under the current rule, an individual who wishes to irrigate a 20-acre hay field may do so with exempt wells that are not manifold into the same irrigation system, that is, there are no pipes connecting the wells to one another. However, assuming an irrigation demand of 2 acre feet per year per acre, the total demand will be 40 acre feet.
“The appropriator is the same and the beneficial use is the same. Though the appropriator would not be in violation of the definition of combined appropriation, his action would not be consistent with the Water Use Act which states that a combined appropriation from the same source that exceeds 10 acre feet per year requires a permit,” noted FWP.
FWP went on to note the example of a subdivision near Manhattan, Montana. There, over 127 lots would be served by exempt wells.
“The total volume of water involved obviously would be over 10 acre feet per year. Clearly, the wells would draw from the same source. Except for the current rule, the developer could not appropriate this water under the Water Use Act without a permit,” notes FWP.
Judge Jeffrey Sherlock agreed with the plaintiffs, stating, “This Court rules that the current definition of ‘combined appropriation’ violates not only the spirit and the legislative intent behind the Water Use Act, but that it also violates the legislative intent in the enactment of the exempt well statute.”
Judge Sherlock also noted in the course of his discussion that the rule allows exempt wells even in a closed basin without a permit and with no metering, reporting or verification of the use of all exempt wells that might be installed. He said this would make it difficult to impossible for a senior water right holder to enforce his right against these junior appropriations.
“Over the last two decades – a period of record low streamflows – the exempt well loophole created by DNRC’s rule has encouraged developers to drill tens of thousands of individual wells in the Clark Fork Basin to avoid the permit system,” said Karen Knudsen, Executive Director of the Clark Fork Coalition, a plaintiff in the case. “The Coalition has long argued that the rule violates the Act, and we are pleased that the Court agreed with us,” said Knudsen.
She said concerns about security of senior water rights, and the availability of water for family ranches, wildlife and instream flow, led landowners and conservationists to petition the state in 2009 to close the loophole. After being denied, plaintiffs took DNRC to court. The case was settled in November 2010 when the state agreed to close the loophole within 15 months, but DNRC pulled out of its commitment and plaintiffs reopened the case, which resulted in the current ruling. The Court’s ruling invalidated DNRC’s current rule defining “combined appropriation” and reinstated the agency’s previous rule, as urged by the plaintiffs.
“We are thrilled with the Court’s decision,” said Matthew Bishop, an attorney with WELC who represented the plaintiffs. “The Montana legislature never intended to allow large consumptive water users to by-pass the water permitting requirements simply by drilling multiple, unconnected wells. The Court recognized that today.”