City of Hamilton making headway on water right issues

Since the passage of the Water Use Act of 1973 and the establishment of a water right permit system in the state of Montana, many municipalities have found themselves caught between the legislature, the Department of Natural Resources and Conservation (DNRC) and the courts, in a confounding and frustrating situation. Each municipality is dealing with the law, the agency’s interpretation of the law, and, finally, the Court’s interpretation of the law in a different fashion depending on its own peculiar circumstance and history.

At its regular meeting last Tuesday, April 3, the Hamilton City Council got a quick overview from attorney Ross Miller of how Hamilton has been affected and some details about the current status of its water rights.

Hamilton gets its water from nine groundwater wells. Each of them has an individual water right permit associated with it. Four of them were in place on June 30, 1973 when the Water Use Act was adopted by the legislature. As a result, the water rights that the city holds to these four wells is “constitutionally protected,” according to Miller. This protection was extended in the language of the Act to all “existing rights” at the time of passage.

Miller said that when DNRC went to implement the law it interpreted “existing rights” to mean that all water users would have a right to the amount of water that they were using at the time the law was passed. Problems arose when the department initiated an examination and “verification” of everyone’s water rights in the adjudication process. Based on the notion that the amount of water being permitted was the amount in actual use at the time, DNRC examined Hamilton’s water rights to its four wells in use at the time and reduced the allowable flow rates by 44% and reduced its total volume by 61%, because that’s what the City was using in 1973.

“What it meant basically,” said Miller, “is that towns were not being allowed to grow.”

The reductions in the city’s flow rates and volumes continued without change, however, up until three weeks ago and it was a long grind getting there.

In the late 1980s and 1990s, the trimmed back rights did not really have an impact because it was easy to get a new water right. Hamilton obtained rights to five more wells after the law was passed, resulting in a total of nine wells at this point. But then a series of things happened to make the process much more difficult and extremely expensive.

First, in 1999 the Bitterroot Basin was closed to any further surface water rights. This didn’t particularly impact Hamilton at the time, since ground water rights were not affected. Then, however, in 2006, Trout Unlimited sued DNRC over water rights on the Smith River and the courts established for the first time that surface water rights and groundwater rights were connected. As a result, anyone seeking to obtain a new groundwater right would have to prove that it would not negatively impact any surface water rights.

Proving that a new well will not negatively impact a surface water right downstream is currently a very difficult, and very expensive, thing to do. As a result, in 2007 the legislature passed HB 831, called the Mitigation Law, which would allow the development of a new ground water right if another existing water right could be retired to ensure that the impact would be mitigated.

To top things off, in 2008, DNRC issued an opinion in which it claimed that there was no “municipal growth policy” in Montana law. According to Miller, most western states do have a municipal growth policy that allows municipalities to expand their water rights as they grow in size. DNRC notified Hamilton at the time that it was using water in exceedance of its rights in all of its wells.

Hamilton currently uses about 2,000 acre feet of water per year which is under what its total use is restricted to, about 3,200 acre feet per year. This is due to the fact that DNRC considers each individual well right separately and considered one of the water rights abandoned.

All this has left Hamilton bumping up against its limits, however. The light at the end of the tunnel, according to Miller, comes from a few recent court rulings. One, in Montana Water Court in 2012 called the Billings Decision, which established that public water systems using surface water rights can grow into their rights. This was followed in 2015 by the Lockwood Decision, another Water Court ruling, that extended this interpretation of the law to ground water rights. These rulings were followed in 2017 by the Helena Decision in the Montana Supreme Court, in which it was decided that if a city has used or plans to use a portion of a water right, the remainder is not abandoned.

Luckily, he said, the Montana courts weighed in with a different interpretation. According to the courts, he said, whatever legal rights a particular water right had prior to July 1973, these continue into the future.

“Montana has adopted a community growth policy,” said Miller.

Miller said that they looked at the city’s history and the reductions in limits and picked out Well #2 as the easiest to substantiate and began the process of seeking a change. A petition was filed to amend the water right and restore the original flow rates and volumes.

“We asked that the well that had been restricted to 500 gpm [gallons per minute] flow and 800 acre feet per year volume limit be restored to its original 1,000 gpm and 1,600 acre foot limit and we were successful,” said Miller.

Miller said that the plan is to move forward with restoring the rights in the other city wells and then pushing into the realm of boundary limits on the place of use, another issue that requires some attention. He said the City needs to expand its place of use but that restoring the water rights to original flows and volumes was a priority.