E. Bench Irrigation Dist. v. Open A Ranch, Inc.

Citation501 P.3d 380,406 Mont. 502
Decision Date21 December 2021
Docket NumberDA 21-0079
Parties EAST BENCH IRRIGATION DISTRICT; United States of America (Bureau of Reclamation), Claimants and Appellees, East Bench Irrigation District; Point of Rocks Angus Ranch, Inc., Objectors and Appellees, Madison Valley Garden Ranch, LLC, Counterobjector and Appellee, v. OPEN A RANCH, INC., Counterobjector and Appellant, Geoduck Land & Cattle, LLC; Smith's Elk Meadows Ranch, LLC, Notice of Intent to Appear and Appellees, Bar J Ranch; David E. & Shelli Schuett; Baldy View Enterprises, LLC; William C. Mancoronal; Roxanne E. Mancoronal; Justin D. Devers; William R. Grose; Point of Rocks Angus Ranch, Inc. ; Clark Canyon Water Supply Co., Intervenors and Appellees.
CourtUnited States State Supreme Court of Montana

For Appellant: Michael J. L. Cusick, Cusick, Mattick & Refling, P.C., Bozeman, Montana

For Appellees East Bench Irrigation District and Clark Canyon Water Supply Co.: William C. Fanning, Fanning Law, PLLC, Bozeman, Montana

For Appellee United States of America (Bureau of Reclamation): John L. Smeltzer, U.S. Department of Justice, ENRD Appellate Section, Todd Kim, Assistant Attorney General, Environment & Natural Resources Division, Washington, District of Columbia

For Appellee Point of Rocks Angus Ranch, Inc.: Ryan McLane, William P. Driscoll, Franz & Driscoll, PLLP, Helena, Montana

For Appellee Madison Valley Garden Ranch, LLC: W. John Tietz, Browning Kaleczyc, Berry & Hoven, P.C., Helena, Montana

For Geoduck Land & Cattle, LLC: John E. Bloomquist, Bloomquist Law Firm, P.C., Helena, Montana

For Intervenors Justin D. Devers and William R. Grose: Max A. Hansen, Max A. Hanson & Associates, P.C., Dillon, Montana, Dana E. Pepper, Bina Peters, River and Range Law, PLLC, Bozeman, Montana

Chief Justice Mike McGrath delivered the Opinion of the Court.

¶1 Open A Ranch, Inc. (Open A) appeals from the Montana Water Court's December 24, 2020 Final Order and July 3, 2019 Summary Judgment Order adjudicating 11 U.S. Bureau of Reclamation (BOR) water rights claims in Basin 41B. The Water Court consolidated objections, counterobjections, and notices of intent to appear filed in response to the BOR's claims to direct flow from the Beaverhead River and reservoir storage in the Clark Canyon Reservoir. All claims are associated with the East Bench Unit Reclamation Project (Project). The East Bench Irrigation District (EBID) and the Clark Canyon Water Supply Company (CCWSC) have contracts with the BOR to deliver water from the Project.

¶2 Open A appeals the Water Court's decisions regarding the EBID's maximum irrigated acreage, the CCWSC's place of use and maximum irrigated acreage, and removal of a curtailment remark from CCWSC shareholders' underlying private water rights. We affirm.

¶3 We restate the issues on appeal as follows:

Issue One: Does Open A have standing in the adjudication of the BOR's and the EBID's water rights claims?
Issue Two: Did the Water Court err by holding the EBID's and the CCWSC's maximum irrigated acreage were not restricted by the East Bench Unit Project's Definite Plan Report?
Issue Three: Did the Water Court err by not providing specific boundaries or maximum irrigated acreage for the CCWSC place of use on the BOR's Clark Canyon Reservoir storage claim?
Issue Four: Did the Water Court err in removing a curtailment remark from all CCWSC shareholders' private water rights in this action?
FACTUAL AND PROCEDURAL BACKGROUND

¶4 The East Bench Unit Project was originally authorized by the Pick-Sloan Flood Control Act of 1944 and was developed as part of the BOR's Missouri River Basin Project. The Project delivers water to irrigators in the Beaverhead Valley near Dillon, Montana. As built, the Project consists of three major infrastructure features: (1) the East Bench Canal; (2) Barretts Dam, which diverts water into the Canal; and (3) the Clark Canyon Dam and Reservoir.

¶5 The hydrology of the area has been described as "boom-bust" and is highly dependent upon and simultaneously threatened by spring runoffs. At the Project's inception, flood irrigation was the primary irrigation method. Prior to the Project, water supply was erratic, with high runoff years that could result in property and crop damage from excessive flooding and low runoff years that failed to provide sufficient water for crop production.

¶6 The Project was designed to stabilize water supply in the valley and thereby support economic development through increases in arable land and crop productivity. By providing reservoir storage, the Project promised to provide an expanded and more reliable water supply for existing users and to extend irrigation into previously uncultivated benchlands east of the Beaverhead River.

¶7 The Project accomplished this by providing storage at Beaverhead River's headwaters. This involved construction of the Clark Canyon Dam to capture surplus flows from the Red Rock River and Horse Prairie Creek, creating the Clark Canyon Reservoir. Irrigators in the valley benefitted from more consistent "reservoir-regulated" flows. Over time, water in the Reservoir was also used for fish and wildlife conservation and recreation.

¶8 Financing for the Project involved federal funds and local investment. Water delivery contracts with the EBID and the CCWSC dating from 1958 outlined repayment arrangements. These 40-year delivery contracts were renewed in 2006.

¶9 Existing water users in the valley formed the CCWSC in 1956. The CCWSC contract delivers allocations of water based on both shareholders' private natural flow rights, which preexisted the Reservoir's construction, and supplemental irrigation determinations based on share class. The Intervenors are all CCWSC shareholders. Appellees Geoduck Land & Cattle, LLC; Madison Valley Garden Ranch, LLC; and Point of Rocks Angus Ranch, Inc. are CCWSC shareholders whose underlying private water rights have already been decreed.

¶10 Appellant Open A is a downstream user with senior private rights to the Project and is a non-signer who was offered shares in the CCWSC but declined.

¶11 The reclamation project also enabled development of a new irrigation district on the benchlands, the EBID, which receives full irrigation service from the Project. The EBID was formed in 1957 via a Madison County District Court order. The BOR operated the EBID for the first 10 years of its 40-year contract, during a statutory development period. Control was transferred to landowners and irrigators within the EBID in 1976. Claim 41B 40850-00 is co-owned by the EBID and the BOR.

¶12 In 1961, the BOR filed a notice of appropriation for the unappropriated flood flows of the Beaverhead River, stating its intent to store the water in the Clark Canyon Reservoir and to use the water for domestic, livestock, irrigation, mining, industrial, municipal, and other purposes. When the BOR posted notice, all natural flow rights from the Beaverhead River had already been appropriated. Thus, the BOR's Reservoir storage claim is junior to almost all other water rights in the valley.

¶13 The Clark Canyon Dam, Clark Canyon Reservoir, Barretts Diversion Dam, and East Bench Canal were constructed from 1961 to 1964. Water was first impounded in the Reservoir in 1964. In addition to the BOR's storage, the Reservoir also includes flood control storage managed by the U.S. Army Corps of Engineers. In 1965, the BOR negotiated with the Army Corps to increase the volume allocated to the BOR by 20,000 acre-feet.

¶14 Since the Project's construction, advancements in irrigation technology—principally electric pumps and sprinklers—have increased irrigation effectiveness and the irrigable acreage in the valley.

¶15 As part of their water claims investigations in the 1960s and 1970s, the Department of Natural Resources and Conservation (DNRC) mapped the irrigated acreage for the EBID based on 1965, 1972, and 1979 aerial photographs of the Beaverhead Valley. The DNRC also added information remarks to CCWSC shareholders' private claims which stated shareholders' underlying private water rights were curtailed pursuant to the 1958 CCWSC water delivery contract.

¶16 In 1981, in accordance with § 85-2-221(1), MCA, the BOR filed Statements of Claim for claims 41B 40850-00 (850) through 41B 40852-00 (852), for Beaverhead River direct flow, and 41B 40854-00 (854) through 41B 40861-00 (861) for storage in the Clark Canyon Reservoir. In 2010, the BOR also filed an amendment to their Reservoir storage claims, consolidating all but the flood control claim into a single right with multiple uses.

¶17 The 850 and 854 claims appeared in the 41B Basin Preliminary Decree issued in 2013. On April 20, 2015, the Water Court consolidated the related objections, counterobjections, and notices of intent to appear into the underlying case. At Open A's request, the case was reconsolidated in August 2015 to adjudicate all of the BOR's claims associated with the East Bench Unit Project, including the 851, 852, and 855 through 861 claims.

¶18 The Water Court's October 10, 2017 scheduling order set the case on a hearing track, noting this case had "long been referenced as [a] seminal case in the Basin 41B adjudication."

¶19 On November 14, 2018, Madison Valley Garden Ranch, a CCWSC shareholder, filed for partial summary judgment requesting removal of the DNRC information remark from its underlying private water rights. Point of Rocks Angus Ranch joined the motion and requested the Water Court remove the curtailment remark from all affected claims. Geoduck Land & Cattle and the Intervenors also joined in requesting basinwide removal, as did the CCWSC. The BOR requested removal from its consolidated claims in the instant case.

¶20 The Water Court had previously denied similar requests to remove curtailment remarks from CCWSC shareholders' claims in the adjudication of Madison Valley Garden Ranch's private rights. In its August 3, 2017 Order Staying Proceedings for Madison Valley Garden Ranch's claims, the court indicated Cause ...

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