The Clark Fork Coalition v. Tubbs, 072517 MTSC, DA 15-0746
| Opinion Judge | BETH BAKER, JUSTICE |
| Party Name | THE CLARK FORK COALITION, a non-profit organization with senior water rights, KATRIN CHANDLER, an individual with senior water rights BETTY J. LANNEN, an individual with senior water rights, POLLY REX, an individual with senior water rights, and JOSEPH MILLER, an individual with senior water rights, Petitioners and Appellees, v. JOHN E. TUBBS,... |
| Attorney | For Appellants: Brian C. Bramblett, Laura Farkas, Special Assistant Attorneys General, Montana Department of Natural Resources and Conservation, Helena, Montana For Appellees: Matthew K. Bishop, Laura King, Western Environmental Law Center, Helena, Montana |
| Judge Panel | We Concur: MIKE McGRATH, JAMES JEREMIAH SHEA, DIRK M. SANDEFUR Justice Laurie McKinnon, specially concurring. |
| Case Date | July 25, 2017 |
| Court | Montana Supreme Court |
Submitted on Briefs: May 31, 2017
APPEAL FROM: District Court of the First Judicial District, In and For the County of Lewis And Clark, Cause No. BDV-2010-874 Honorable Jeffrey M. Sherlock, Presiding Judge
For Appellants: Brian C. Bramblett, Laura Farkas, Special Assistant Attorneys General, Montana Department of Natural Resources and Conservation, Helena, Montana
For Appellees: Matthew K. Bishop, Laura King, Western Environmental Law Center, Helena, Montana
OPINION
BETH BAKER, JUSTICE
¶1 The Clark Fork Coalition, Katrin Chandler, Betty Lannen, Polly Rex, and Joseph Miller (collectively, "the Coalition") challenged the validity of a Department of Natural Resources and Conservation administrative rule concerning groundwater appropriations exempt from permitting requirements. The First Judicial District Court invalidated the rule. We affirmed. Clark Fork Coalition v. Tubbs, 2016 MT 229, 384 Mont. 503, 380 P.3d 771 (hereafter "Clark Fork I"). The Coalition sought fees under the private attorney general doctrine, and the District Court granted its motion. The Department appeals the District Court's order awarding fees to the Coalition.
¶2 We reverse.
PROCEDURAL AND FACTUAL BACKGROUND
¶3 The Montana Water Use Act (hereafter "the Act") exempts certain new groundwater appropriations from permitting requirements. Section 85-2-306, MCA. In part, it exempts appropriations outside of stream depletion zones that do not exceed 35 gallons per minute and 10 acre-feet per year, "except that a combined appropriation from the same source by two or more wells or developed springs exceeding 10 acre-feet, regardless of the flow rate, requires a permit." Section 85-2-306(3)(a)(iii), MCA (emphasis added). The statute does not define the phrase "combined appropriation."
¶4 The Department promulgated a rule in 1987 that stated, "Groundwater developments need not be physically connected nor have a common distribution system to be considered a 'combined appropriation.'" Admin. R. M. 36.12.101(7) (1987) (hereafter "1987 Rule"). The Department issued a new rule in 1993 that defined a "combined appropriation" as "an appropriation of water from the same source aquifer by two or more groundwater developments, that are physically manifold into the same system." Admin. R. M. 36.12.101(13) (1993) (hereafter "1993 Rule").
¶5 In 2009, the Coalition filed a petition for declaratory ruling with the Department asking it to invalidate the 1993 Rule. A Department hearing examiner considered, but ultimately denied, the Coalition's petition, concluding that the 1993 Rule did not conflict with the Act. The hearing examiner nonetheless ordered the Department to initiate proposed rulemaking to repeal the 1993 Rule because of increasing demands on water resources in Montana. For reasons not relevant to the issue on appeal, the Department did not repeal and replace the 1993 Rule.
¶6 The Coalition filed a petition for judicial review in the District Court in 2010, challenging the validity of the 1993 Rule and the hearing examiner's denial of its petition. The District Court invalidated the 1993 Rule, reinstated the 1987 Rule, and required the Department to develop a new rule consistent with its order. The court reasoned that the 1993 Rule's definition of "combined appropriation" "violates not only the spirit and legislative intent behind the Water Use Act, but . . . [also] the legislative intent in the enactment of the exempt well statute."
¶7 The Montana Well Drillers Association, the Montana Association of Realtors, and the Montana Building Industry Association appealed the District Court's order. The Department did not participate in the appeal. We affirmed the District Court's invalidation of the 1993 Rule and its reinstatement of the 1987 Rule, but reversed its order directing the Department to initiate new rulemaking. Clark Fork I, ¶ 46. We held that the Rule was inconsistent with the statute and was therefore invalid. Clark Fork I, ¶ 28.
¶8 Prior to our decision in Clark Fork I, the Coalition had moved for fees under the private attorney general doctrine, and the District Court had granted that motion. The court rejected the Department's argument that it was protected from liability by quasi-judicial immunity, because it held that the issue in the litigation-the Department's promulgation of the 1993 Rule-was not a quasi-judicial function. The court concluded that the private attorney general doctrine applied, reasoning that the litigation between the parties directly implicated constitutional interests. The court explained that the constitution mandates that the legislature keep track of water rights. The legislature passed the Water Use Act to breath[e] life into that mandate. However, [the Department]'s rule conflicted with the statute which codifies the protections guaranteed in the constitution. While decided on statutory grounds, this Court's Order [on the Coalition's petition for judicial review] is explicit in integrating the constitutional rationale underlying the decision.
The court concluded that the Coalition "qualifies for attorney fees under the private attorney general doctrine because it bore a significant and necessary burden to vindicate all Montanans' constitutional water rights in a suit against the party which created the invalid rule." The parties then stipulated to attorney fees in the amount of $100, 000, but agreed that the Department would not pay the fees or appeal the District Court's order on fees until this Court resolved the appeal in Clark Fork I.
STANDARDS OF REVIEW
¶9 We review for abuse of discretion a district court's ruling granting or denying attorney fees under the private attorney general doctrine. Gateway Vill., LLC v. Mont. Dep't of Envtl. Quality, 2015 MT 285, ¶ 15, 381 Mont. 206, 357 P.3d 917; W. Tradition P'ship v. Att'y Gen. of Mont., 2012 MT 271, ¶ 7, 367 Mont. 112, 291 P.3d 545; Baxter v. State, 2009 MT 449, ¶ 46, 354 Mont. 234, 224 P.3d 1211. A district court's determination whether legal authority exists for an award of attorney fees is a conclusion of law, which we review for correctness. Mlekush v. Farmers Ins. Exch., 2015 MT 302, ¶ 8, 381 Mont. 292, 358 P.3d 913.
DISCUSSION
¶10 Whether the Coalition was entitled to recover attorney fees following its successful challenge to the Department's 1993 Rule.
¶11 The Department argues that the District Court abused its discretion in granting the Coalition's motion for attorney fees under the private attorney general doctrine. It contends that the private attorney general doctrine does not apply, in part because the Coalition did not vindicate important constitutional interests. The Department contends also that the quasi-judicial immunity doctrine protects it from liability for attorney fees because the Coalition's challenge was based on the hearing examiner's discretionary decision to deny the Coalition's petition-a quasi-judicial act.
¶12 The Coalition argues that the District Court rightly determined that the private attorney general doctrine applied to its successful challenge of the Department's rule. The Coalition asserts that its litigation vindicated constitutional interests articulated in Article IX, Section 3, of the Montana Constitution, which provides for the protection of existing water rights and water resources and requires the Legislature to regulate and administer water rights in the state. The Coalition argues further that the quasi-judicial immunity doctrine does not shield the Department from liability because the litigation concerned the Department's promulgation of the 1993 Rule-an administrative act-and not the quasi-judicial act of the hearing examiner's decision.
¶13 An administrative agency may promulgate rules only within the bounds set by the Legislature. See Clark Fork I, ¶ 25 (stating that "[r]ules adopted by administrative agencies which conflict with statutory requirements or exceed authority provided by statute[ ] are invalid" (citation and internal quotations omitted)). Agency rules must be "consistent and not in conflict with the statute" and must be "reasonably necessary to effectuate the purpose of the statute." Clark Fork I, ¶ 25 (quoting § 2-4-305(6), MCA). We determined in Clark Fork I that the Department's 1993 Rule conflicted with the Act and was thus invalid. Clark Fork I, ¶ 28. The District Court agreed with the Coalition that its success in the litigation justified an award of attorney fees.
¶14 Montana follows the American Rule, under which "'a party in a civil action is generally not entitled to [attorney] fees absent a specific contractual or statutory provision.'" Bitterroot River Protective Ass'n v. Bitterroot Conservation Dist., 2011 MT 51, ¶ 20, 359 Mont. 393, 251 P.3d 131 (hereafter "BRPA III") (quoting Montanans for the Responsible Use of the Sch. Trust v. State ex rel. Bd. of Land Comm'rs, 1999 MT 263, ¶ 62, 296 Mont. 402, 989 P.2d 800 (hereafter "Montrust")). There are limited "equitable exceptions" to this rule. W. Tradition P'ship, ¶ 13; Montrust, ¶ 64. Among them is the private attorney general...
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