Developers abused loophole for new subdivisions, threatening water availability for family ranches, wildlife, instream flows

Late yesterday, the Supreme Court of the State of Montana upheld an Oct. 2014 district court ruling that ordered the Montana Department of Natural Resources and Conservation (DNRC) to close a loophole in the state’s water well permit rules that developers and other large water users were using to avoid the permitting process when drilling thousands of water wells for new subdivisions. In this arid state, where water is a precious and scarce resource, the lack of oversight has unfairly threatened the availability of water for existing users.

“The exempt well loophole has amounted to a giveaway of our limited water resources,” said Polly Rex of the Horse Creek Water Users, a plaintiff in the case. “The state Supreme Court really sent a message to the DNRC and other stakeholders, reverting to a better rule that doesn’t threaten existing water right holders. The plaintiffs and I finally feel like we’ve been heard. We are very pleased.”

Rural homeowners, ranchers, and farmers in Montana have long relied on the “exempt well” provision of the law that affords them the opportunity to drill a small well without obtaining a permit. It’s an approach that was intended for small, dispersed uses of water with little potential to impact existing rights.

But during Montana’s residential housing boom of the last two decades, developers seized on the loophole to avoid obtaining permits for drilling water wells when converting agricultural lands into subdivisions. The effect on a groundwater aquifer is immense; just one subdivision can drill hundreds of new water wells. In Gallatin County, where sprawl and conversion of agricultural land into subdivisions has increased significantly, DNRC issued 11,409 exempt well certificates between 1993 and 2010.

“We are thrilled with the court’s decision,” said Laura King, the Western Environmental Law Center attorney representing the plaintiffs. “The Montana legislature never intended to allow large consumptive water users to by-pass the water permitting requirements simply by drilling multiple, unconnected wells. The court recognized that today.”

The Montana Water Use Act provides a specific exception from water right permitting for small groundwater wells, but the Act includes a provision requiring that “combined appropriations” from the same source from two or more wells for the same development obtain a water right permit if the total amount appropriated exceeds 10 acre feet a year. But in 1993, DNRC negated this limitation by adopting a rule that a “combined appropriation” requires a permit only if the wells are physically plumbed together. However, very few subdivision developments, if any, are ever connected in that manner.

“Over the last two decades – a period of record low stream flows – the exempt well loophole created by DNRC’s rule has encouraged developers to drill tens of thousands of individual wells in the Clark Fork Basin to avoid the permit system,” said Karen Knudsen, executive director of the Clark Fork Coalition. “The Coalition has long argued that the rule violates the Act, and we are pleased that the Supreme Court agreed with us.”

Plaintiffs in the case have been concerned for years about security of senior water rights and the availability of water for family ranches, wildlife and instream flow.  Landowners and conservationists petitioned the state in 2009 to close the loophole. After being denied, plaintiffs took DNRC to court. The case settled in November 2010 when the state agreed to close the loophole within 15 months, but DNRC pulled out of its commitment and plaintiffs re-opened the case, which resulted in today’s win. The Supreme Court’s ruling invalidated DNRC’s current rule defining “combined appropriation” and reinstated the agency’s previous rule, as urged by the plaintiffs.

Laura King, Western Environmental Law Center, 406-204-4852, Polly Rex, Horse Creek Water Users, 406-328-4413, Karen Knudsen, Clark Fork Coalition, 406-529-7836,


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