In re Eldorado Coop Canal Co.

• Decision Date: 26 April 2016
• Docket Number: No. DA 15–0034.,DA 15–0034.
• Citation: 2016 MT 94,383 Mont. 205,369 P.3d 1034
• Parties: ELDORADO COOP CANAL COMPANY, Claimant and Appellant, Lower Teton Joint Objectors; Objectors and Cross–Appellants, Farmers Cooperative Canal Co.; Eldorado Coop Canal Company, Objectors, Teton Coop Reservoir Co.; NOIA and Appellee/Cross–Appellant, Patrick Saylor, Intervenor and Appellee.
• Court: Montana Supreme Court

383 Mont. 205

369 P.3d 1034

2016 MT 94

ELDORADO COOP CANAL COMPANY, Claimant and Appellant, Lower Teton Joint Objectors; Objectors and Cross–Appellants, Farmers Cooperative Canal Co.; Eldorado Coop Canal Company, Objectors, Teton Coop Reservoir Co.; NOIA and Appellee/Cross–Appellant, Patrick Saylor, Intervenor and Appellee.

No. DA 15–0034.

Supreme Court of Montana.

Submitted on Briefs Nov. 12, 2015.

Decided April 26, 2016.

For Appellant: John E. Bloomquist, Bloomquist Law Firm, PC, Helena, Montana.

For Appellee Teton Coop Reservoir Co.: Holly Jo Franz, Ada C. Montague, Franz & Driscoll, PLLP, Helena, Montana.

For Appellees Lower Teton Joint Objectors: Stephen R. Brown, Garlington, Lohn & Robinson, PLLP, Missoula, Montana.

Justice MICHAEL E. WHEAT

delivered the Opinion of the Court.

¶ 1 Eldorado Coop Canal Company (Eldorado), a group known as the Lower Teton Joint Objectors (LTJO), and Teton Coop Reservoir Co. (TCRC) all appeal from the Montana Water Court's Order Amending and Adopting Master's Report in Water Court Case 41O–129B. We affirm.

ISSUES

¶ 2 We restate and review the parties' following issues:

1. Did the Water Court correctly conclude that the cumulative volume of water Eldorado may divert from the Teton River for the Eldorado, Truchot, Dennis, and Beattie Rights is limited to no more than 15,000 acre-feet per year?

2. Did the Water Court err when it chose not to assign separate volume limits for each of Eldorado's four sets of combined irrigation and stockwater rights for the Eldorado, Truchot, Dennis, and Beattie Rights?

3. Did the Water Court err when it limited the flow rate of the Truchot Right to 300 miner's inches instead of 225 miner's inches?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 3 The present case is the second segment of Water Court Case 41O–129. The previously litigated portion stemmed from Eldorado's claimed use of the Bateman Ditch, which also involved a question certified by the District Court to the Water Court pursuant to § 85–2–406(2)(b), MCA

.¹ Following our decision in Giese the Water Court bifurcated the case into 41O–129A and 41O–129B. Case 41O–129A was limited to the issues involving the use of the Bateman Ditch. We reviewed those issues in Eldorado Co–Op Canal Co. v. Lower Teton Joint Objectors, 2014 MT 272, 376 Mont. 420, 337 P.3d 74. Presently, we review the parties' appeals of the Water Court's determination of the remaining aspects of the case, styled as Case 41O–129B.

¶ 4 The Teton River's headwaters are northwest of the town of Choteau, located in west-central Montana along the Rocky Mountain Front. After leaving the mountains, the river travels east, making southeast and northeast turns, before joining the Marias River around one hundred and fifty miles later. The Teton River does not have an onstream reservoir capable of stabilizing late season flows. The sources of early season high flows and late season low flows are spring runoff and the continued melting snowpack. It is common for stretches of the river to be completely dry by late summer. The Teton River is located in the Teton River Basin, 41O, which has not yet received final adjudication and is currently controlled by a Temporary Preliminary

Decree.

¶ 5 Eldorado is one of four companies that divert water from the Teton River. It is historically considered to be the most senior of the four companies. Eldorado claims water rights based upon the rights decreed in Perry v. Beattie, Cause No. 371, Montana Eleventh Judicial District Court, Teton County, March 28, 1908.² Under the Perry decree the District Court established the priority dates and flow rates for approximately 40 water rights. Of these decreed water rights Eldorado owns four. They are referred to as the Eldorado, Truchot, Dennis, and Beattie Rights, which are based on their ownership at the time of the decree. Initially, Eldorado owned the Eldorado Right, and over time it acquired these other three named rights. Under the purview of the District Court, a Water Commissioner has historically delivered water to the applicable water users in line with their rights as established in the Perry decree.

¶ 6 As required by the Montana Water Use Act (WUA), codified at Title 85, MCA, Eldorado filed a Statement of Claim for its four decreed rights—for its irrigation rights and for its stockwater rights—on an Irrigation District Claim Form. During the examination of Basin 41O the Montana Department of Natural Resources and Conservation (DNRC) assigned individual claims to each of Eldorado's four Perry rights. Eldorado was assigned a total of eight claims: four irrigation claims and four stockwater claims. Thus, each of the four named rights (Eldorado, Truchot, Dennis, and Beattie) contains an irrigation and a stockwater component.

¶ 7 Objectors LTJO and TCRC, along with others, filed objections to Eldorado's claims. Some of the objectors were able to come to an agreement with Eldorado during the settlement process. LTJO and TCRC were not. In June 2012, the parties participated in a four-day trial in front of a Water Master. In August 2013, the Water Master issued a Master's report related to Eldorado's water claims based on the four named rights. All parties filed objections to the Master's report. In November 2014, the Water Court responded to the parties' objections and issued an order amending and adopting the Master's report. Issues One and Two of this appeal pertain to volume, the facts of which are discussed in this section. Issue Three pertains to flow rate, the facts of which are discussed exclusively in the discussion of Issue Three.

A. Master's report

¶ 8 The Water Master issued a report with his findings of fact and conclusions of law regarding each of Eldorado's claimed water rights. Pertinent to the issues on appeal, the Master determined the four named rights should be limited to the following total volume quantifications: 1) Eldorado Right limited to 9,000 acre-feet per year; 2) Truchot Right limited to 450 acre-feet per year; 3) Dennis Right limited to 300 acre-feet per year; and 4) Beattie Right limited to 600 acre-feet per year—totaling 10,350 acre-feet per year. The Master based these findings in part on witness testimony in an effort to determine the historic volume used for each right.

¶ 9 The Master stated in the report that Eldorado's volume has continued to increase, most notably after 1980, due to Eldorado's expansion of its irrigated acres and period of use. The Master stated the historic volume should be determined as of the date of a right's perfection, which he determined to be 1908 for the Eldorado Right based on the completion of Eldorado's original intent to develop a ditch system. The Master outlined three possible methods to determine the volume: 1) based on actual diversion at the time of perfection; 2) based on the acres historically irrigated at the time of perfection plus a volume-per-acre standard; and 3) based on the decreed flow rate, the number of acres the flow rate could reasonably irrigate, and a volume-per-acre standard.

¶ 10 The Master found problems with the evidence related to the first two methods. Specifically, the Master stated there was insufficient evidence to determine volume based on actual diversion, and the evidence related to the acreage historically irrigated at the time of perfection was not credible. Instead, he found the third method, based on the decreed flow rate, was the better method of determining volume for the right.

¶ 11 For the third method of making a volume determination the decreed flow rate is the only precisely known fact. To determine the remaining two elements, number of acres the flow rate could reasonably irrigate, or duty of water, and the volume-per-acre standard, the Master analyzed the testimonial and documentary evidence to reach those determinations. The Master found the duty of water to be 0.5 miner's inch per acre based on the proposed findings of fact Eldorado submitted during the Perry litigation. With a 0.5 inch-per-acre standard and Eldorado's decreed flow rate of 3,000 miner's inches, the Master concluded 6,000 acres should be used to determine the volume for the Eldorado Right.

¶ 12 The final aspect, the volume-per-acre standard, the Master evaluated: the volume as claimed by Eldorado on its Statement of Claim; testimony from District Court Judge R.D. McPhillips, who marshaled the decreed right; the Water Commissioner's records; testimony from Eldorado's expert witness John Westenberg; and testimony from LTJO's expert witness Jay Johnson.³ JUDGE MCPHILLIPS TestifIeD to using a one acre-foot-per-acre-per-year standard when marshaling Eldorado's rights, but admitted he did not know if it was or was not the appropriate standard to use. He stated that figure was given to him by an employee of either the county's Agricultural Stabilization Conservation Service⁴ or the county's DNRC Soil and Water Conservation District office.

¶ 13 Ultimately, the Master found the most credible evidence was a standard offered by LTJO's expert witness. Johnson testified that for three of Eldorado's rights (Truchot, Dennis, and Beattie) a 1.5 acre-feet-per-acre-per-year standard should apply.⁵ He was unable to identify the source of the standard except to state it was a figure from the DNRC. The Master found "while [Johnson] did not reference the source for the standard in DNRC documents, his expertise places him in the position to know the standards the DNRC is using. His expertise also gives him the ability to determine if that standard is reasonable.... Johnson's testimony and the exhibits used ... [are] the most compelling evidence of an appropriate [standard]."

¶ 14 The Master applied Johnson's standard to the Eldorado Right at 6,000 irrigable acres. The Master used the same standard given by Johnson for the three remaining rights, and applied it to the acreage of each right's historic place of use, which he determined based on Johnson's analysis of the original property owners' legal descriptions.

B. Water Court's...