One exception to rule them all, One exception to find them,
One exception to bring them all and in the darkness bind them.
Montana Water Policy Interim Committee Update
Nearing the end of the interim, Montana’s Water Policy Interim Committee (WPIC) met in Helena on July 21st and 22nd. This interim committee’s entire first day’s agenda was devoted to maintaining and expanding the exempt well loophole. Recall that Upper Missouri Waterkeeper challenged a new proposed subdivision, Horse Creek Hills, use of exempt from review water. The District court agreed that exempt water wells threaten the public trust and existing private property water rights.
Instead of focusing on how we can ensure private property water rights and waterways are protected from new development, WPIC is considering several draft bills prepared by legislative staff that would be a boon for developers and threaten everyone else’s water resources. With WPIC seeking public input on ‘exempt water’ wells and usage, Waterkeeper is encouraging members of the public to weigh in and submit public comments before the 5 pm deadline on Tuesday, September 8th.
We encourage the public to raise these key points in their public comments:
- Close the exempt water well loophole to comply with multiple court ruling and protect our water resources and property rights.
- Grandfathering in an unknown number of subdivisions exempt water use threatens waterways, water resources, and private property water rights.
- Advancing proposed legislation on ‘De Minimus’ threatens water resources, violates private property water rights, and would result in costly litigation.
- Mitigation is needed but will not work if the state exempts water use by doubling down on the loophole.
Attempting to Grandfather In Exempt Water Use
The first draft bill considered was “AN ACT GRANDFATHERING SUBDIVISIONS WORKING DRAFT; AMENDING SECTION 85-2-306, MCA.” This draft legislation intends to capture all the parcels divided between 2014 and 2024 that are being denied exceptions by the DNRC in response to the Horse Creek Hills court order. This legislation would “grandfather” all qualifying parcels by providing rights to use ground water.
The opaque and vague language setting the parameters for qualifying “tracts of record” led to many questions about the scope of the problem and the need for this legislation. Committee members rightfully struggled with the concept of moving the draft bill forward before the scope of the issue was understood.
Know Unknowns of Subdivisions and Impact
Another issue is how many, what impact, and at what cost. WPIC member Rep. Russ Miner, R-HD26 Great Falls, asked Mark Johnson, representing land surveyors, to “drive a stake in the ground so we know what we are dealing with,” how many are there out there? Mr. Johnson seemed to recall discussing 13 subdivisions that “we all talked about,” but could not provide a definitive number.
Rep. Miner then called Peter Scott, Bozeman water attorney, to the podium, “Mr. Scott how many?” Scott’s reply: “That’s the question we are all asking.”
Mr. Scott muddied the water further: “I spoke to one consultant who received 169 letters (from DNRC) addressing family transfers. I don’t know how many of them are caught in this problem. I think the source of this information is DNRC and for whatever reason they have been reluctant to provide that information.”
Rep. Miner concluded stating that “In order for this to work it’s essentially like I said we need to drive a stake in the ground today, so we know what we are dealing with. I’ll officially make the request to DNRC, if they have that information, that the committee would like to see it. But the committee needs to see it.”
No DNRC officials were present to respond to Rep. Miner’s request nor was information provided to the committee by DNRC between the WPIC’s May and July meetings even though the same questions had been asked at the earlier meeting.
Doubling Down On Exempt Water Use For Developers
The center piece for the committee’s discussion was, “A BILL FOR AN ACT ENTITLED ‘AN ACT DE MINIMUS WORKING DRAFT” amending sections “…85-2-306, MCA.”
This draft legislation claims to reduce the size of the exception by establishing per acre limits in place of the concept of “combined appropriations.” Current statutory language excepting the use of up to “10 acre-feet a year, except that a combined appropriation … requires a permit” is struck. This legislation replaces this language by creating two new exceptions: (A) 2 acre-feet a year for any use type on a tract of record less than 20 acres; or (B) 3 acre-feet a year for any use type and up to an additional 7 acre-feet a year for stock use on a tract of record of 20 or more acres or that can be described as a 1/32 or larger aliquot part of the United States government section. (Section 3. 85-2-306, MCA)
Working Group members cite these changes as significant in two regards. First, the draft language strikes the heavily litigated provision of “combined appropriation”. In place of this limitation, divided parcels are given specific volume limitations, 2 or 3 acre-feet depending on parcel size. Members also see the “reduction” from 10 acre-feet per year per parcel to 2 or 3 acre-feet provides a more appropriate volume for the purpose of use.
DNRC and the Legislature have struggled for decades with the definition of “combined appropriation.” Further, domestic uses, including lawn and garden, often require no more than 2 or 3 acre-feet of water per year. In fact, most 602 exceptions fall within this range. In other words, the perceived savings by reducing the exception from 10 acre-feet to 2 or 3 acre-feet isn’t the most important issue.
The more important issue is the total volume limit of 10 acre-feet combined for all parcels divided. This legislation proposes to double the current total volume limit of 10 acre-feet, “The total allocation for all subdivisions consisting of 6 or more tracts of record created from a parent tract of record may not exceed 20 acre-feet a year for uses allowed in 85-2-306(3)(a)(iv).”
Two Wrongs Don’t Make A Right
With 3 successive courts relying upon the 10 acre-feet volume limitation and current litigation questioning the validity of the exception itself, doubling the volume limitation seems bold, just not in the minds of the working group and the WPIC chair. In fact, Working Group members claimed in their testimony that the increase in total volume under the exception from 10 to 20 acre-feet is actually a “haircut.”
Working Group member Mark Larson explains the ‘group think’ that 20 is not twice as much as 10: I “would argue that it isn’t an expansion of what we currently have. I can remember doing subdivisions with exempt wells in the past. I have been in this business for over 20 years, and this is a haircut from what we were doing.”
The WPIC/Work Group logic that increasing the statutory limit to the ground water permit exception from 10 acre-feet to 20 acre-feet is a “haircut” is simple:
- Large subdivision developments used the exempt well loophole for decades to develop tens of thousands of parcels without regard to impacts on Montana rivers and senior water right owners;
- Successful litigation by UMW stopping the proposed Horse Creek Hills subdivision stopped the ongoing abuse of the exempt well loophole by DNRC and the development community; therefore
- Doubling the statutory limit from 10 acre-feet to 20 acre-feet is a “haircut” because developers used to be able to use way more than 20 acre-feet using the exempt well loophole.
WPIC Chair Wylie Galt doubled down on this upside-down math at the closing of the hearing on De Minimus legislation: “I want to put a bow on some of the concerns I have. We get it called as an expansion. If we just straight look at that before Horse Creek Hills, I don’t know I can’t remember the exact amount, but you could phase. You could go way over. After Horse Creek Hills the Court said that you can’t do phasing anymore. So, for us to come in and say you can only do it twice I think is intellectually walking into a gray area to call that an expansion. … Everyone here agrees our goal is not to have an expansion. I feel very confident we have checked that box.”
This flawed logic justifying the expansion of the total annual volume from 10 acre-feet to 20 acre-feet simply invites future litigation. Stubbornly, WPIC seems to agree with Working Group members and the chair; put on the blinders and focus on the exceptions to the water right permitting process and don’t consider options regarding the existing permit and change process itself.
Mitigation Can Work Without Exempt Well Loophole
Mitigation should matter. Agriculture owns most of Montana’s senior water rights. Unregulated development using the exempt well loophole is directly impacting these senior rights. Pressure to develop is never ending. Our rivers are in crisis. Mitigation provides a path where water can be transferred from existing uses to return water back to our rivers. The water right permitting and change statutes allow for responsible growth, protecting our rivers and our rights.
“AN ACT MITIGATION WORKING DRAFT, AMENDING SECTIONS 85-2-102, 85-2-360, 85-2-362, AND 85-2-420, MCA” was a diversion away from WPIC’s exempt well loophole agenda; however, the proposed changes recommended result in only minor improvements to Montana’s stream mitigation statutes.
Existing law is poorly drafted and is causing confusion about the definition of “mitigation” and when and where mitigation can be used. The current definition of “Aquifer recharge” is struck from Section 85-2-102, Definitions, MCA in the draft bill. Clarifying language describing “Mitigation” is added and in a later section, Section 4., Title 85-2-362., language limiting “mitigation plans” is amended to clarify their use. As proposed, PD0005 is a positive step forward. It would improve both the definitions and processes concerning water mitigation.
Mitigation should be a path forward. However, without imposing strict limits to the exempt well loophole, mitigation statutes along with all the permit and change processes will remain idle. Why pay for water when you can get it free?
On the other hand, PD005 does present an opportunity. Section 4. of PD005 amends 85-2-362, MCA: “(3) the department may not require an applicant, through a mitigation plan, to provide more water than the quantity needed to offset the adverse effects on a prior appropriator or show reasonable legal availability.” (emphasis added).
As this section is open to amendment there is an opportunity to insert language that would demand water be brought back to our rivers. Rather than restricting mitigation to limit its use to offset adverse effects or provide legal available water, the statute should require a portion of the mitigation water be used to benefit the impacted rivers and streams. In other words, any future mitigation plan must mitigate adverse effects and/or legal availability and must augment flows in source water streams. With Montana’s rivers in crisis, we cannot simply mitigate growth 1:1, 1 acre-foot of depletion for 1 acre-foot of mitigation. We need to build resilience in our rivers by demanding that new growth bring water back to our streams, not just take it for profit.
Close The Exempt From Review Water Use Loophole
Senior Water Rights Coalition Attorney Hurtha Lund was given an opportunity to present alternative legislation focusing on the permitting process to WPIC. While the draft includes vague language in key provisions, the draft proposal does focus on the water right permitting process rather than the exception. Public notice and the opportunity to object would be required for future ground water permitting under such a proposal, for example. Chair Galt made it clear at the end of the hearing that no committee resources would be used to pursue the draft proposal submitted by the Senior Water Rights Coalition.
Come this September WPIC will make decisions approving draft legislation for submission to the 2027 Legislature. Without a change in course WPIC is lining up another session of division, leading to future rounds of litigation. Make sure you submit a public comment raising your concerns here before the 5 pm, Tuesday, September 8th deadline here.