Coalition v. Tubbs

• Citation: 384 Mont. 503,380 P.3d 771,2016 MT 229
• Decision Date: 13 September 2016
• Docket Number: DA 14-0813
• Parties: The Clark Fork Coalition, a non-profit organization Katrin Chandler, an individual, Betty J. Lannen, an individual, Polly Rex, an individual, and Joseph Miller, an individual, Petitioners and Appellees, v. John E. Tubbs, in his capacity as Director of the Montana Department of Natural Resources and Conservation and the Montana Department of Natural Resources and Conservation, an executive branch agency of the State of Montana, Respondents, v. Montana Well Drillers Association, Intervenors and Appellants, v. Montana Association of Realtors and Montana Building Industry Association, Intervenors and Appellants, v. Mountain Water Company, Intervenor.
• Court: United States State Supreme Court of Montana

384 Mont. 503

380 P.3d 771

2016 MT 229

The Clark Fork Coalition, a non-profit organization Katrin Chandler, an individual, Betty J. Lannen, an individual, Polly Rex, an individual, and Joseph Miller, an individual, Petitioners and Appellees,

v.John E. Tubbs, in his capacity as Director of the Montana Department of Natural Resources and Conservation and the Montana Department of Natural Resources and Conservation, an executive branch agency of the State of Montana, Respondents,

v.Montana Well Drillers Association, Intervenors and Appellants,

v.Montana Association of Realtors and Montana Building Industry Association, Intervenors and Appellants,

v.Mountain Water Company, Intervenor.

DA 14-0813

Supreme Court of Montana.

Argued and Submitted: May 18, 2016

Decided: September 13, 2016

For Appellants: Abigail J. St. Lawrence (Argued), Bloomquist Law Firm, Helena, Montana (Attorney for MAR and MBIA ), Ryan K. Mattick (Argued), Moore, O'Connell & Refling, P.C., Bozeman, Montana (Attorney for Montana Well Drillers Association ).

For Appellees: Laura King (Argued), Matthew K. Bishop, Western Environmental Law Center, Helena, Montana (Attorneys for the Clark Fork Coalition ), Stephen R. Brown (Argued), J. Andrew Person, Garlington, Lohn & Robinson, PLLP, Missoula, Montana (Attorneys for Mountain Water Company ).

For Amicus Curiae: Tara DePuy, Attorney at Law, PLLC, Livingston, Montana (Attorney for Montana Associate of Counties ), Steven J. Fitzpatrick, Browning, Kaleczyc, Berry & Hoven, PC, Great Falls, Montana, Jesse J. Richardson, Jr., Attorney at Law, Morgantown, West Virginia (Attorneys for Water Systems Council ), Jack R. Tuholske, Attorney at Law, Missoula, Montana (Attorney for Bitterrooters for Planning, et al.), Thomas J. Jodoin, City Attorney, Helena, Montana, Chris D. Tweeten, Tweeten Law, P.L.L.C., Missoula, Montana (Attorneys for Montana League of Cities and Towns ), Laura S. Ziemer, Patrick Byorth, Meg Casey, Stan Bradshaw, Montana Trout Unlimited, Bozeman, Montana.

Justice Laurie McKinnon

delivered the Opinion of the Court.

¶ 1 The Water Use Act provides a comprehensive permit based system for new appropriations of water in Montana. The Act permits certain groundwater appropriations to be exempt from the permitting process. Relevant here, § 85–2–306(3)(a)(iii), MCA

, provides an exemption when a groundwater appropriation does not exceed 35 gallons per minute and 10 acre-feet per year. However, the subsection also provides an “except[ion]” to the exemption when a “combined appropriation” from the same source by two or more wells or developed springs exceeds 10 acre-feet per year, regardless of flow rate.

¶ 2 The term “combined appropriation” is not defined within the Water Use Act. Since the adoption of § 85–2–306(3)(a)(iii), MCA

, the state agency charged with administering the Act, the Department of Natural Resources and Conservation (DNRC), has taken contradictory positions regarding the meaning of the term. Specifically, within a period of six years, the DNRC promulgated consecutive rules with conflicting interpretations as to whether groundwater developments must be physically connected to constitute a “combined appropriation.” Initially, in 1987, three months after the Legislature adopted the “combined appropriation” language, the DNRC promulgated Admin. R. M. 36.12.101(7) (1987), which provided that “[g]roundwater developments need not be physically connected nor have a common distribution system to be considered a ‘combined appropriation.’ ” However, in 1993, the DNRC reversed its position and adopted the current administrative rule, Admin. R. M. 36.12.101(13), which states that the term “combined appropriation” means “groundwater developments, that are physically manifold into the same system.”

¶ 3 After an adverse ruling from the DNRC Hearings Examiner, a group of senior water users—Katrin Chandler, Betty Lannen, Polly Rex, Joseph Miller, and the Clark Fork Coalition (collectively, the Coalition)—challenged the validity of Admin. R. M. 36.12.101(13) in the First Judicial District Court, Lewis and Clark County. The Coalition maintained that the DNRC's definition of “combined appropriation” was inconsistent with the applicable statute arguing that the statute does not require physical connection. The District Court agreed. The court invalidated Admin. R. M. 36.12.101(13), reinstated Admin. R. M. 36.12.101(7) (1987), and directed the DNRC to formulate a new administrative rule consistent with the court's order. The Montana Well Drillers Association, the Montana Association of Realtors, and the Montana Building Industry Association (collectively, the Well Drillers) appeal from that order.¹ We affirm.

¶ 4 We address the following issues on appeal:

1. Whether the District Court erred by invalidating Admin. R. M. 36.12.101(13).

2. Whether the District Court erred by reinstating Admin. R. M. 36.12.101(7) (1987).

3. Whether the District Court erred by directing the DNRC to institute rulemaking consistent with the court's order.

FACTUAL AND PROCEDURAL BACKGROUND

¶ 5 In 1973, the Montana Legislature instituted the current water rights system by adopting the Montana Water Use Act, § 85–1–101, MCA

, et seq. The Act sets forth the statutory framework under which water rights are obtained, administered, and adjudicated. A critical component of the Act is the permit system administered by the DNRC.

With certain exceptions, the Act requires those seeking new appropriations of water to apply to the DNRC for a permit. Section 85–2–301, MCA

. The primary function of this permit based system is the protection of senior water rights from encroachment by prospective junior appropriators adversely affecting those rights. Section 85–2–101(4), MCA.

¶ 6 Consistent with this purpose, the Act imposes both substantive and procedural protections for water right users. Substantively, before the issuance of a new water appropriation, the Act requires that a prospective junior appropriator show that water is legally and physically available, the proposed use of water is for a beneficial use, and the new appropriation will not adversely affect existing water rights of senior prior appropriators. Section 85–2–311(1)

–(2), MCA. Procedurally, a prospective junior appropriator must provide notice, through the DNRC, to senior users who may be affected by the proposed appropriation and must permit senior users an opportunity to object to the prospective water right. Section 85–2–307, MCA. If objections do arise from senior users, the DNRC must hold a contested hearing on the objections. Section 85–2–309, MCA.

¶ 7 Senior users are afforded even more protection in highly appropriated basins in Montana that have been closed from further surface water appropriations. In these “closed basins,” where water claims often exceed water availability, the DNRC may not issue new surface water permits. Section 85–2–360(1)

–(3), MCA. The DNRC may consider groundwater permits, but the process for obtaining a groundwater permit in a closed basin is demanding. In addition to the general requirements for obtaining a permit, the appropriator must commission a hydrogeological report to determine if the proposed appropriation could result in a net depletion of surface water. Section 85–2–360(2), MCA. If the report indicates a hydrogeological connection, then the appropriator must show that there will be no net depletion of water. Section 85–2–360(3)(b), MCA.

¶ 8 The Act provides certain exemptions to the rigorous permitting process. Section 85–2–306(1)

–(9), MCA. If an appropriation qualifies for an exemption, none of the permitting procedures under the Act constrain the proposed appropriation. See generally § 85–2–306 (1) –(9), MCA. A prospective appropriator need not show that water is legally and physically available; that the new appropriation will not deplete surface flow; or that the water will not be used inconsistently with senior rights. See generally § 85–2–306(1) –(9), MCA. Nor does the appropriator need to provide notice to senior users or allow senior users an opportunity to object. See generally § 85–2–306 (1) –(9), MCA.

Similarly, the more onerous requirements for obtaining an appropriation in a closed basin are inapplicable. See generally § 85–2–306 (1)

–(9), MCA.

¶ 9 Relevant to this case, § 85–2–306(3)(a)(iii), MCA

, provides an exemption for groundwater appropriations considered de minimis; that is, those appropriations that do not exceed 35 gallons a minute and 10 acre-feet per year. In 1987, the Legislature incorporated the term “combined appropriation” into the de minimis groundwater exemption. Section 85–2–306(3)(a)(iii), MCA (1987), provided:

a permit is not required before appropriating groundwater by means of a well or developed spring with a maximum appropriation of less than 100 gallons per minute, except that a combined appropriation from the same source by two or more wells or developed springs exceeding this limitation requires a permit.

Shortly after the incorporation of the “combined appropriation” language into the statute, the DNRC promulgated Admin. R. M. 36.12.101(7) (1987) (hereinafter, the 1987 rule). The 1987 rule provided that wells or developed springs “need not be physically connected nor have a common distribution system to be considered a ‘combined appropriation.’ ” Instead, the 1987 rule instructed that two or more groundwater developments constitute a “combined appropriation” if used together for a single “project or development.”

¶ 10 In 1991, the Legislature amended the statute. The Legislature reduced the permissible flow rate and imposed a volume limitation on the exemption, but retained the term “combined appropriation.” Section 85–2–306(3)(a)(iii), MCA

, as amended in 1991, provides:

a permit is not required before appropriating ground water by means of a well or developed spring with a maximum appropriation of 35 gallons a minute or less, not to exceed 10 acre-feet a year, except that a combined appropriation from the same source from

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