No. 91-009
IN THE SUPREME COURT OF THE STATE OF MONTANA
IN THE MATTER OF THE APPLICATION
FOR CHANGE OF APPROPRIATION WATER
RIGHTS NOS. 101960-41s AND 101967-41s
BY KEITH AND ALICE ROYSTON.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Thomas C. Honzel, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Sarah Arnott Ozment argued; Attorney at Law,
Livingston, Montana.
For Respondent:
James A. Hubble argued; Christensen & Hubble,
Stanford, Montana; Donald MacIntyre argued;
Attorney at Law, Helena, Montana.
Submitted: June 12, 1991
Decided: August 12, 1991
Filed:
Justice R. C. McDonough delivered the Opinion of the Court.
Keith and Alice Royston appeal from an order of the First
Judicial District Court, Lewis and Clark County, upholding the
decision of the Department of Natural Resources and Conservation
(DNRC) denying the Roystons' application for a change of place of
use of water rights and a change of use from flood irrigation to
sprinkler irrigation. We affirm.
The Roystons raise the following issues on appeal:
(1) Did the District Court err in holding that the Roystons,
as applicants for a change of appropriative water rights, had the
burden of proving lack of adverse effect on other appropriators,
adequate means of diversion, and beneficial use of the water?
(2) Did the District Court err in upholding the hearings
examiner's refusal to hear evidence regarding the objectors' water
rights?
(3) Did the ~istrictCourt err in holding that the objectors
had standing to object to the application based upon the prima
facie content of their claims?
(4) Did the District Court err in determining that there was
substantial credible evidence to support the DNRCrs denial of the
application for change?
(5) Are the Roystons entitled to attorney's fees pursuant to
the private attorney general theory or another applicable theory?
Petitioners Keith and Alice Royston applied to the DNRC to
change the place of use of their water rights and to expand the
number of acres irrigated. At the time of application, the
Roystons had existing rights in Ross Fork Creek, a tributary of the
Judith River located in Judith Basin County, Montana, pursuant to
a preliminary decree entered by the Water Court on April 24, 1987.
The Roystonsl existing rights are to flood irrigate 32 acres with
a flow rate of 750 g.p.m, (gallons per minute) and to irrigate 54
acres with a flow rate of 500 g.p.m. The application requested
approval to change the place of use of their rights and increase
the acreage irrigated from 86 to 266 acres.
Respondents Turner Ranch, fnc., Basin-Angus Ranch, and
olBrien,Inc. (objectors) filed objections. The objectors are all
appropriators of Ross Fork Creek, junior to the Roystons, whose
rights are set forth in the temporary preliminary decree. Turner
Ranch is located upstream of the Roystonsl point of diversion; the
other objectors are located downstream. The objectors complained
that the proposed expansion of irrigated acreage and change to
sprinkler irrigation would result in greater depletion of Ross Fork
Creek than historically has occurred, to the detriment of the
junior objectors .
In September of 1988, the DNRC conducted a contested case
hearing. Both parties introduced expert testimony regarding the
effects the change would have on flows in Ross Fork Creek. In
order to prevent the adverse effect alleged by the objectors, the
applicants proposed a plan of Itwaterbanking1'to store water in the
subsurface soil profile by heavily irrigating the proposed places
of use during periods of high water in Ross Fork Creek. During
other months the Roystons' proposal would limit their diversions
to the flow and volume historically consumed through flood
irrigation of the original places of use.
On November 15, 1989, the DNRC issued its final order denying
the Roystons' application. The Roystons petitioned the District
Court for judicial review. The District Court affirmed the DNRC's
decision, holding that the statute relied upon by the hearings
examiner places the burden of proof upon an applicant for a change
of use of a water right. The Roystons appeal the decision of the
District Court affirming the DNRC. The DNRC has joined the
objectors as respondents on appeal.
Did the District Court err in holding that the Roystons, as
applicants for a change of appropriative water rights, had the
burden of proving lack of adverse effect on other appropriators,
adequate means of diversion, and beneficial use of the water?
Changes in appropriation rights are governed by 5 85-2-402,
MCA. The statute provides in pertinent part:
85-2-402. (Temporary) Changes in appropriation
rights. ... (2) Except as provided in subsections (3)
through ( 5 ) , the department shall approve a change in
appropriation right if the appropriator Droves by
substantial credible evidence that the following criteria
are met:
(a) The proposed use will not adversely affect the
water rights of other persons or other planned uses or
developments for which a permit has been issued or for
which water has been reserved.
(b) . . .
the proposed means of diversion,
construction, and operation of the appropriation works
are adequate.
(c) The proposed use of water is a beneficial use,
. ..
Section 85-2-402 (2), MCA (emphasis added). The Roystons argue that
because a 1985 amendment deleted language referring to the
contested case hearing stage in the application process (see § 85-
2-402, MCA (1983)) the applicant's burden in the now amended
statute only applies at the initial application stage and the
burden is still on the objector at the hearing stage. Thus,
Roystons concede that the DNRC may not summarily grant an
application unless the applicant proves by substantial credible
evidence that the water rights of other users will not be adversely
affected. However, once objections are raised, they argue that the
burden then shifts to the objectors.
We disagree. Prior to adoption of the Water Use Act of 1973
and amendment of 5 85-2-402, MCA, in 1985, parties objecting to the
change had the burden of demonstrating adverse impact to their
water rights. See Hutchins, The Montana Law of Water Rishts, pp.
75-76 (1958); Holmstrom Land Co. v. Newlan Creek Water District
(19791, 185 Mont. 409, 435, 605 P.2d 1060, 1075; Hansen v. Larsen
(1911), 44 Mont. 350, 353, 120 P. 229, 231; Lokowich v . City of
Helena (1913), 46 Mont, 575, 577, 129 P. 1063, 1063. However, the
statutory scheme set forth in the Water Use Act has re-assigned
this burden. The placement of the burden on the applicant also
conforms to general rules regarding burdens of proof. !'The initial
burden of producing evidence as to a particular fact is on the
party who would be defeated i f no evidence w e r e given on e i t h e r
side. Thereafter, the burden of producing evidence is on the party
who would suffer a finding against him in the absence of further
evidence. Section 26-1-401, MCA. Under the statute here, the
applicant would be defeated if neither side produced evidence.
Also, except as otherwise provided by law, a party has the burden
of persuasion as to each fact the existence or nonexistence of
which is essential to the claim for relief or defense he is
asserting. Section 26-1-402, MCA. The applicant for a change of
appropriation right has the burden as to the nonexistence of
adverse impact. The plain language of the statute now clearly
places the burden on the applicant.
The Roystons further argue that because their water rights are
existing water rights recognized by the 1972 Montana Constitution,
construing the statute as changing the burden of proof and placing
it on the applicant is an impermissible retroactive application of
a statute because it impairs vested rights acquired pursuant to the
1972 Montana Constitution. See 5 85-2-102 (9); Art. IX, Sec (3) (I),
Mont. Const. This argument fails. A water right recognized by the
1972 Constitution does not include the right to not have to carry
a burden of proof. This Court has held that the application of
statutory procedures to water rights vested under the 1972 Montana
Constitution is not unconstitutional. See Castillo v. Kunneman
(1982), 197 Mont. 190, 642 P.2d 1019.
In Castillo, this Court considered whether the Montana Surface
and Groundwater Act, 5 5 85-2-101 et seq., MCA, applied to water
rights perfected before the effective date of the Act. A grantor
of land contended that the part of the Act requiring approval from
the DNRC before severing part of an appropriation right from the
land was unconstitutional and should not apply to water rights
perfected before the effective date of the Act. This Court noted
that the Act was adopted to provide for the administration and
regulation of water rights, and further noted that the particular
section in question, 5 85-2-403(3), MCA (deleted, sec. 16, ch. 448,
L. 1983), did not "contain specific language which precludes its
application to water rights perfected prior to July 1, 1973. Other
provisions contained in the . . . Act do contain such preclusive
language. Castillo, 642 P.2d at 1025. Similarly, the statute
governing changes in appropriation rights in this case, 5 85-2-
402, MCA, also lacks language precluding its application to water
rights perfected before July 1, 1973.
"A retroactive law is one that takes away or impairs vested
rights acquired under existing laws or creates new obligations or
imposes new duties in respect to transactions already past. ...
Statutes that modify the procedure for exercising a vested right
or carrying out a duty do not constitute retroactive legislati~n.~~
Castles v. State (1980), 187 Mont. 356, 360, 609 P.2d 1223, 1225.
Section 85-2-402, MCA, merely modifies the procedure for exercising
a vested right, and as such is not retroactive.
Under our standard of review of questions of law, we review
an agency decision simply to determine if the agency's
interpretation of the law is correct. Steer, Inc. v. Department
of Revenue (Mont. 1990), 803 P.2d 601, 603, 47 St.Rep. 2199, 2200.
Here, the burden of proof is controlled by the statute, which
clearly places the burden on the applicant. The District Court did
not err in upholding the DNRC's interpretation of the statute.
11.
Did the District Court err in upholding the hearings
examiner's refusal to hear evidence regarding the objectors' water
rights?
The Roystons contend that because they were precluded from
showing the nature of the objectors' rights they were unable to
demonstrate that the objectors' rights would be unaffected by the
Roystons* change in place of use and change from flood to sprinkler
irrigation. The Roystons contend that by failing to take evidence
on these rights, it was impossible for the DNRC to properly assess
adverse impact on those water rights according to the statute, and
thus the Roystons were denied due process.
This argument fails. The DNRC gave its reasoning for not
accepting evidence of the objectors' water rights:
Mistaken nonrecognition of an objector's right, and grant
of a change authorization based thereon, could
irreparably damage objector; while mistaken recognition
of that objector's right and denial of a change
authorization would maintain the status quo with no
actual loss to anyone.
The records of the objectors' water rights are set forth in the
Water Court's temporary preliminary decree. The hearings examiner
correctly concluded that the rights set forth in the decree were
prima facie evidence that the objectors have water rights in the
appropriated stream. See 85-2-227, MCA. The legislature
provided a separate procedure in the Water Use Act by which the
8
Roystons could make a timely objection to the rights claimed by the
objectors in Ross Fork Creek, when such rights were adjudicated by
the Water Court and set forth in the temporary preliminary decree
for that basin. See generally Title 85, Chapter 2, Part 2, Montana
Code Annotated. To allow the Roystons to present evidence of the
objectors' water rights could essentially lead to the re-
adjudication of water rights claimed in Ross Fork Creek. The
District Court did not err in upholding the hearings examiner's
decision to use the temporary preliminary decree as prima facie
evidence of the objectors' water rights rather than to allow the
Roystons to present evidence of the objectors' water rights.
111.
Did the District Court err in holding that the objectors had
standing to object to the application based upon the prima facie
content of their claims?
The Roystons argue that two of the objectors, Turner Ranch and
Basin-Angus Ranch, did not have standing to object to the Roystons'
application to change their senior water right. They contend that
Turner lacks standing because only downstream appropriators whose
rights are hydrologically connected to the applicant's right have
standing to object to a change.
This contention lacks merit. Generally, an appropriator with
a water right in a particular source has an obvious interest in any
water right granted from that source and thus has standing to
challenge any water right granted in that source. Holmstrom Land
Co. v. Newlan Creek Water District (1979), 185 Mont. 409, 425, 605
P.2d 1060, 1069. An upstream junior appropriator can be damaged
by a change in the amount of water appropriated downstream if a
shortage ensues and a senior appropriator causes the junior to
forego his water until the senior's rights are fulfilled. Thus,
Turner ranch as an upstream junior appropriator has an obvious
interest in any right granted in Ross Fork Creek. See, e.g.,
Holmstrom, supra. Basin-Angus also has an interest in any water
appropriated in Ross Fork Creek as a downstream junior
appropriator.
The Roystons also argue that the issue of standing should have
been certified to District Court. The Roystons do not argue that
objector 0'Brien did not have standing to object under the statute.
Since the Roystons did not challenge O'Brien, Inc.'s standing to
object, any alleged error in allowing Basin-Angus Ranch and Turner
Ranch to proceed in the same hearing using the same counsel, or
refusing to certify the issue of standing to district court, is
rendered harmless. The objection of O'Brien alone was sufficient
to cause the matter to go to hearing. A reviewing court is
precluded from modifying or reversing an agency's decision unless
substantial rights of the appellant have been prejudiced. Section
2-4-704 (2), MCA. The Roystons suffered no prejudice because Basin-
Angus and Turner were parties to the hearing.
IV .
Did the District Court err in determining that there was
substantial credible evidence to support the DNRCls denial of the
application for change?
The Roystons argue that the record lacks substantial credible
evidence to support the hearings examiner's decision. They contend
that without evidence of the objectors1 water rights and their
hydrologic relation to the Roystonsl rights, there is no
substantial evidence of adverse impact controverting their
evidence. The Roystons contend that the record indicates that
their new sprinkler system would not divert any more water than
what was historically consumed through flood irrigation. They
further argue that while the District Court noted that there was
no testimony regarding whether the sprinkler system could operate
at decreased flows, there is no evidence in the record that the
proposed sprinkler system would not work. They contend that the
objectors1 expert in fact stated that the system could be operated
at lower flows during periods of shortage and, therefore, that the
record does not support the conclusion that their appropriation
works were inadequate.
The Roystons introduced evidence of their water Ifbanking"
plan through the testimony of an expert witness. The objectorst
expert testified that water "banking" may lead to wide-spread
wilting of plants in areas previously saturated because there is
a dense stand of plants competing for a very small amount of water.
The expert also testified that water "banking" may be harmful to
the land.
The record indicates that high water periods occur yearly in
Ross Fork Creek and are of variable, but generally short, duration.
The record does not show the relative percentages of water,
historically diverted but unconsumed, that evaporated, returned to
Ross Fork Creek, or were lost to the creek through deep percolation
or otherwise. The hearings examiner did find that due to the
proximity to the creek of the acreage originally irrigated, most
of the unconsumed water would have quickly returned to the creek,
either on the surface or via subsurface routes under the original
system of flood irrigation. The record indicates that because of
the increased distance of the new places of use to the creek under
the proposed sprinkler irrigation system that there would be
significantly less immediate return flow to Ross Fork Creek. The
record does not indicate how much immediate or delayed return flow
would occur under the proposed system.
Regarding the adequacy of the Roystonst proposed means of
diversion, the hearings examiner found that the record did not
indicate how the proposed sprinkler system could be operated at
design flow rates during high water and then be modified or
"nozzled down" to operate with substantially less flow later in the
season. The hearings examiner further noted as a "recognized
technical fact1#that there is a minimum flow below which water
cannot be effectively applied even with such adjustments and that
such threshold flows were not of record nor could they be
determined from the record.
Judicial review of an agency's decision is governed by the
Montana Administrative Procedure Act (MAPA), 5 2-4-704, MCA. Under
MAPA our review of an agency decision is narrowly defined:
The court may not substitute its judgement for that of
the agency as to the weight of the evidence on questions
of fact. The court may affirm the decision of the agency
or remand the case for further proceedings. The court
may reverse or modify the decision if substantial rights
of the appellant have been prejudiced because:
(a) the administrative findings, inferences,
conclusions, or decisions are:
(i) in violation of constitutional or statutory
provisions;
(ii) in excess of the statutory authority of the
agency ;
(iii) made upon unlawful procedure;
(iv) affected by other error of law;
(v) clearly erroneous in view of the reliable,
probative, and substantial evidence on the whole record;
(vi) arbitrary or capricious or characterized by
abuse of discretion or clearly unwarranted exercise of
discretion; or
(b) findings of fact, upon issues essential to the
decision, were not made although requested.
Section 2-4-704 (2), PICA. The Roystons are essentially asking this
Court to reweigh the evidence. The Roystons had the burden of
demonstrating that granting their application would not adversely
affect the rights of the objectors. The Roystons failed to meet
their burden. The application was properly denied because the
evidence in the record does not sustain a conclusion of no adverse
affect to others and it cannot be concluded from the record that
the means of diversion and operation of the appropriation works are
adequate. The DNRCts decision was not clearly erroneous in view
of the reliable, probative, and substantial evidence on the whole
record.
v.
Are the Roystons entitled to attorney's fees pursuant to the
private attorney general theory or another applicable theory?
Because we have a f f i r m e d t h e DNRCfs decision i n all respects,
we need not reach this issue.
The order of t h e District C o u r t i s
AFFIRMED.
We concur: /
Chief Justice
August 12, 1991
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
Sarah Arnott Ozment
Attorney at Law
P.O. Box 1160
Livingston, MT 59047
James A. Hubble
Christensen & Hubble
P.O. Box 556
Stanford, MT 59479
Donald MacIntyre
Dept. of Natural Resources
1520 E. Sixth Ave.
Helena, MT 59620
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA