Egan Slough Cmty. v. Flathead Cnty. Bd. of Cnty. Comm'rs

• Decision Date: 22 March 2022
• Docket Number: DA 21-0032
• Citation: 408 Mont. 81,506 P.3d 996
• Parties: EGAN SLOUGH COMMUNITY, Yes! for Flathead Farms and Water, and Amy Waller, Plaintiffs and Appellants, v. FLATHEAD COUNTY BOARD OF COUNTY COMMISSIONERS, a Body Politic of Flathead County, Flathead County Planning and Zoning Department, and Flathead City-County Health Department, Defendants and Appellees, and Montana Artesian Water Company, Defendant, Appellee, and Cross-Appellant.
• Court: Montana Supreme Court

408 Mont. 81

506 P.3d 996

EGAN SLOUGH COMMUNITY, Yes! for Flathead Farms and Water, and Amy Waller, Plaintiffs and Appellants,

v. FLATHEAD COUNTY BOARD OF COUNTY COMMISSIONERS, a Body Politic of Flathead County, Flathead County Planning and Zoning Department, and Flathead City-County Health Department, Defendants and Appellees,andMontana Artesian Water Company, Defendant, Appellee, and Cross-Appellant.

DA 21-0032

Supreme Court of Montana.

Argued and Submitted: January 19, 2022

Decided: March 22, 2022

For Appellants: Roger Sullivan (argued), Dustin Leftridge, McGarvey Law, Kalispell, Montana, David K. W. Wilson, Jr. (argued), Morrison, Sherwood, Wilson & Deola, Helena, Montana

For Appellees: Alan McCormick (argued), Garlington, Lohn & Robinson, PLLP, Missoula, Montana, Tara R. Fugina, Deputy Flathead County Attorney, Kalispell, Montana

For Appellee/Cross-Appellant Montana Artesian Water Company: Victoria A. Marquis (argued), Shane P. Coleman, Holland & Hart LLP, Billings, Montana

Justice Ingrid Gustafson delivered the Opinion of the Court.

¶1 This case arises from litigation related to the expansion of an agricultural zoning district through citizen initiative to include the area where Montana Artesian Water Company (Montana Artesian) has been developing a large-scale water bottling plant. Egan Slough Community, Yes! For Flathead Farms and Water, and Amy Waller (collectively, Egan Slough Community) appeal from the Order Re Summary Judgment II, issued by the Eleventh Judicial District Court, Flathead County, on November 25, 2019. Montana Artesian cross-appeals from the Order Re Summary Judgment issued June 6, 2019; the Order Re Protective Orders and Motion to Compel issued August 26, 2019; the Order Re Summary Judgment III issued December 15, 2020; and the Order Denying Attorney Fees and Costs issued May 25, 2021.

¶2 We restate the issue on appeal:

1. Whether Montana Artesian's water bottling facility is a valid nonconforming use under the Egan Slough Zoning District Regulations.

Montana Artesian raises numerous issues on cross-appeal.¹ We renumber and restate the issues raised on cross-appeal:

2. Whether the initiative was illegal because it impacted less than the entire county under this Court's holding in City of Shelby v. Sandholm;

3. Whether the initiative violated § 7-5-132(1), MCA, by both enacting a resolution and repealing a different resolution;

4. Whether the initiative violated § 7-5-132(4)(b), MCA, by failing to set out fully the resolution to be repealed;

5. Whether the initiative violated § 7-5-132(4)(a), MCA, by legislating on multiple subjects;

6. Whether the initiative violated § 7-5-131(1), MCA, by legislating on subjects beyond the authority of the Flathead County Board of County Commissioners;

7. Whether the initiative creates illegal reverse spot zoning;8. Whether the District Court abused its discretion in declining to compel discovery;

9. Whether the initiative violated procedural due process;

10. Whether the initiative violated the right to equal protection;

11. Whether the initiative constitutes a taking of Montana Artesian's water right and other business property; and

12. Whether the District Court abused its discretion in denying Montana Artesian attorney fees and costs related to defending Egan Slough Community's petition for writ of mandate.

¶3 We affirm the District Court on all issues raised.

PROCEDURAL AND FACTUAL BACKGROUND

¶4 The Flathead County Board of County Commissioners (Board) created the Egan Slough Zoning District (ESZD) in the Creston area in December 2002, with the adoption of Flathead County Resolutions 1594 and 1594A. The original ESZD was a citizen-initiated zoning district created pursuant to Title 76, chapter 2, part 1, MCA, often referred to as Part 1 zoning. Section 5 of the ESZD regulations states the purpose of the ESZD "is to protect and preserve agricultural land in the Egan Slough area for the performance of a wide range of agricultural functions. It is intended to control the scattered intrusion of uses not compatible with an agricultural environment, including, but not limited to, residential development." Permitted uses are limited to agricultural, horticultural, and silvicultural uses, residential dwellings, and ancillary activities. The ESZD regulations provide for 80-acre minimum lot sizes, limitations on subdivision of land, and performance standards for permitted uses. Some conditional uses are possible with a conditional use permit, but none of the allowed conditional uses involve industrial activities such as a water bottling plant. The ESZD regulations also include provisions for nonconforming uses, which pertain to uses and structures that existed prior to the adoption of the regulations or, in this case, prior to the expansion of the ESZD to include the additional property.

¶5 Lew and Larel Weaver (Weavers) are property owners in the Creston area. Part of their property was included in the original boundaries of the ESZD. The Weavers formed Montana Artesian as a Montana for-profit corporation in 2014 to develop a water bottling plant on land owned by their company Weaver Entities, Inc., outside the original boundaries of the ESZD. Since 2014, Weaver Entities, the Weavers, and Montana Artesian have acquired numerous permits and constructed a building and commercial water well toward the goal of operating a water bottling plant. Montana Artesian acquired a permit from the Department of Natural Resources and Conservation (DNRC) to appropriate 710.53 acre feet of water annually with a priority date of June 24, 2015.² The existing facility in its present configuration and with its present equipment is not designed to utilize the entire water right. For example, the current septic system is designed to accommodate only one-quarter of the anticipated wastewater at full build-out. Montana Artesian's plan from the start was to gradually expand operations over the course of twenty years. Expanding its current operation would require Montana Artesian to expand the size of its building and obtain a new wastewater discharge permit, as well as other new or revised permits. Based on the business plan submitted with Montana Artesian's application for a water permit, DNRC gave Montana Artesian until 2039 to file its notice of project completion to perfect its water right.

¶6 In June 2016, the Board received a citizen-initiated zoning petition through Part 1 zoning to expand the original 1,150-acre ESZD to include approximately 530 acres of adjoining property. The proposed expansion included the land on which Montana Artesian was developing its water bottling facility. The Board denied the petition in November 2016 with the adoption of Resolution 1594B.³

¶7 After the Board denied the petition to expand the ESZD, Egan Slough Community sought to expand the ESZD through citizen initiative. Egan Slough Community and other proponents gathered signatures to put Initiative 17-01 on the ballot and place the issue of expanding the ESZD directly before the voters of Flathead County. On June 5, 2018, the voters of Flathead County passed Initiative 17-01, with 70 percent of the electors voting in favor of expanding the ESZD. The results of the election were certified on June 21, 2018. The initiative enacted Resolution 1594C, which added approximately 530 acres of adjoining land to the ESZD and subjected the additional land to the ESZD regulations, including the land on which Montana Artesian was developing its commercial water bottling plant.

¶8 The expanded ESZD went into effect on June 21, 2018. At this time, Montana Artesian was ready for operation but for one final permit needed to sell bottled water or distribute it to the public. Prior to June 21, 2018, Montana Artesian had not sold or shipped commercial quantities of bottled water. It acquired its final permit, the Wholesale Food Manufacturing License on July 3, 2018, and began bottling, selling, and distributing bottled water at that time.

¶9 On June 29, 2018, counsel for Egan Slough Community wrote to the Flathead County Attorney, requesting the County enforce the ESZD regulations against Montana Artesian. The County Attorney passed the letter to the Flathead County Planning and Zoning Department ("FCPZ Department"), which treated the letter as a zoning violation complaint and initiated an investigation. The FCPZ Department conducted a site visit on July 12, 2018. Montana Artesian was bottling water to fulfill existing contracts during the site visit. Counsel for Egan Slough Community wrote to the County again on August 8, 2018, arguing the County needed to enforce the ESZD regulations against Montana Artesian to shut down its operations.

¶10 After receiving no response, Egan Slough Community filed this lawsuit on September 7, 2018, against the Flathead County defendants and Montana Artesian. Egan Slough Community sought mandamus relief from the court, arguing the County had a clear legal duty to enforce the ESZD regulations against Montana Artesian. Egan Slough Community also sought declaratory judgment concluding Montana Artesian's operations were not permitted under the ESZD regulations. Montana Artesian filed counterclaims, alleging the initiative was unconstitutional, illegal, and could not be enforced. The County opposed both Egan Slough Community's contentions Montana Artesian was not a legal nonconforming use and Montana Artesian's contentions the ESZD regulations amounted to a taking without just compensation. The County deferred to the District Court on the remaining issues Montana Artesian raised.

¶11 Before the court ruled on Egan Slough Community's petition for writ of mandate, the FCPZ Department issued its Enforcement Decision on January 4, 2019, concluding Montana Artesian's facility was a legal nonconforming use as the building was built and capable of producing commercial quantities of bottled water before June 21, 2018, and allowing Montana Artesian to "conduct operations in the manner described in its various...