No. 91-140
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
IN THE MATTER OF THE ADJUDICATION OF THE EXISTING
RIGHTS TO THE USE OF ALL THE WATER, BOTH SURFACE
AND UNDERGROUND, WITHIN THE YELLOWSTONE RIVER ABOVE
AND INCLUDING BRIDGER CREEK IN GALLATIN, PARK, SWEET
GRASS, AND STILLWATER COUNTIES, MONTANA.
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APPEAL FROM: The Montana State Water Courts, s w E OF MONTANA
b.i)b,i,
The Honorable iJ. IJ. Lessley, Judge Presiding.
COUNSEL OF RECORD:
For Appellant:
R. Mark Josephson (argued); Josephson & Fredricks,
Big Timber, Montana
For Respondent:
Hon. Marc Racicot, Attorney General; George
Schunk, Assistant, (argued) Helena, Montana
Donald MacIntyre, Dept. of Natural Resources,
Helena, Montana
Robert N. Lane, Dept. Fish, Wildlife & Parks,
Helena, Montana
Blake Watson (argued), Barry M. Hartman, Robert L.
Klarquist, John R. Hill, Jr., Patrick Barry, U. S.
Department of Justice, Washington, D.C.
Doris S. Poppler, U.S. Attorney, Billings, Montana
Jody Miller, Office of General Counsel, Dept. of
Agriculture, Missoula, Montana
John C. Chaffin, Office of Field Solicitor, Dept.
of the Interior, Billings, Montana
Daniel F. Decker, Confederated Salish & Kootenai
Tribes, Pablo, Montana
David Pengelly; Knight, Maclay & Maser, Missoula,
Montana
Ann E. Wilcox, Billings, Montana
John W. Duncan, Joplin, Montana
For Amicus Curiae:
Bruce R. Toole (argued) and Janice L. Rehberg
(argued), Crowley Law Firm, Billings, Montana
(Tiegen)
Michael E. Zimmerman (argued) and Susan J.
Callaghan, Montana Power Co., Butte, Montana
W. G. Gilbert, Jr. and W.G. Gilbert, 111, Dillon,
Montana (MacKenzie)
John North and Lon J. Maxwell, Dept. of State
Lands, Helena, Montana
Submitted: January 23, 1992
Decided: May 7, 1992
Filed:
Clerk
Justice R. C. McDonough delivered the Opinion of the Court.
This is an appeal from an order of the Water Court forfeiting
appellants' water rights for failing to timely file a claim
pursuant to 5 85- 2- 226, MCA. The Water Court upheld the
constitutionality of g 85- 2- 226, MCA, finding that its application
works as a forfeiture and not an abandonment. The appellants,
whose water rights were dismissed, request this Court to reverse
the Water Court and declare 5 85- 2- 226, MCA, unconstitutional. We
affirm.
We will review the following issues.
I. Does Article IX, Section 3 , of the Montana Constitution
protect pre-1973 water rights from legislative forfeiture?
11. Does 5 85- 2- 226, MCA, violate the due process clauses of
Article 11, Section 17, of the Montana Constitution and the
Fourteenth Amendment of the United States Constitution?
111. Does forfeiture of water rights under § 85- 2- 226, MCA,
constitute a taking without just compensation in violation of
Article 11, Section 29, of the Montana Constitution and the Fifth
and Fourteenth Amendments of the United States Constitution?
IV. Does 5 85- 2- 226, MCA, violate the equal protection
clauses of Article 11, Section 4, of the Montana Constitution and
the Fourteenth Amendment of the United States Constitution?
V. Does g 85- 2- 226, MCA, constitute an impairment of
contracts in violation of Article 11, Section 31, of the Montana
Constitution and Article I, Section 10, of the United States
Constitution?
.
This action was initiated sua sponte through order of the
Chief Water Judge, the late Judge W.W. Lessley, on August 3 , 1988.
The law governing Montana's water rights adjudication required pre-
1973 water claims to be filed with the Department of Natural
Resources by 5:OO p.m. on April 30, 1982, or be conclusively
presumed abandoned. Sections 85-2-221 and 226, MCA. The Water
Court consolidated 109 late claims filed in Yellowstone River Basin
above and including Bridger Creek (Basin 43B). Opportunity was
provided each of the late claimants in Basin 43B, as well as other
similarly situated late claimants from around the state to
participate in the proceedings.
As could be expected, numerous interested parties responded.
Briefs were filed, oral arguments presented and proposed findings
of fact and conclusions of law accepted by the Water Court. On
July 17, 1989, the Water Court issued an order that as paraphrased
below included:
(1) section 85-2-226, MCA, acts as a forfeiture statute
that results in the involuntary loss of a water right
caused by the failure of an owner to timely file his
claim as required by statute.
(2) By order of the Montana Supreme Court, December 7,
1981, to be timely received, a water claim must be
actually received and filed with the Department of
Natural Resources by 5:OO P.M. on April 30, 1982, claims
received thereafter are forfeited and declared null and
void.
( 3 ) Section 85-2-226, MCA, survives constitutional
challenge on due process, equal protection, and
impairment-of-contracts grounds.
(4) Section 85-2-226, MCA, does not conflict with Article
IX, Section 3(1) of the Montana Constitution.
(5) Provisions were made for evidentiary hearings
2
providing the Water Court opportunity to make individual
determinations of whether specific claims were timely
filed.
On December 17, 1990, final judgment was entered pursuant to Rule
54(b), M.R.Civ.P., finding the late filed claims of Basin 43B to be
conclusively abandoned under 5 85- 2- 226, MCA. From this judgment
an appeal was filed by Kenneth D. and Donna L. Laubach, Robert B.
and Connie Malcolm, the Boulder River Ranch, Inc., Carmine B. and
Francine S. Rizzotto and the Jumping Rainbow Ranch, all late
claimants in Basin 43B (hereinafter collectively referred to as
appellants) .
Each of the appellants exercised their right to an evidentiary
hearing and alleged different factual circumstances for having
filed late. Evidence was presented by each appellant of a
historical and continued use of water for varied beneficial
purposes. All appellants contend they in no way have 'abandoned'
their rights. The Water Court determined that each had filed late
and under § 85- 2- 226, MCA, had forfeited their claim.
I.
Does Article IX, Section 3, of the Montana Constitution
protect pre-1973 water rights from legislative forfeiture?
Article IX, Section 3, of the Montana Constitution provides in
its entirety:
Water rights.(l) All existing rights to the use of
any waters for any useful or beneficial purpose are
hereby recognized and confirmed.
(2) The use of all water that is now or may
hereafter be appropriated for sale, rent, distribution,
or other beneficial use, the right of way over the lands
of others for all ditches, drains, flumes, canals, and
aqueducts necessarily used in connection therewith, and
3
the sites for reservoirs necessary for collecting and
storing water shall be held to be a public use.
(3) All surface, underground, flood, and atmospheric
waters within the boundaries of the state are the
property of the state for the use of its people and are
subject to appropriation for beneficial uses as provided
by law.
(4) The legislature shall provide for the
administration, control, and regulation of water rights
and shall establish a system of centralized records, in
addition to the present system of local records.
The appellants contend that subsection (1) provides a
guarantee of existing water rights and any statutory scheme that
obviates that guarantee is against public policy. The Montana
Constitution is alleged to extend to the legislature the power to
affirm and preserve existing water rights but not the power to
forfeit or extinguish them.
We have held that "[to the extent of beneficial use] the 1972
constitutional recognition of water rights is effective and will be
sustained". McDonald v. State (1986), 220 Mont. 519, 722 P.2d 598.
However, we have also held that Article IX, Section 3(1):
prevents the State from affecting rights vested at the
time the Constitution was adopted other than through the
exercise of Constitutionally provided powers such as
eminent domain, Mont. Const. Art. 11, Sec. 17, or the
general police power, and without affording due process
of law, Mont. Const. Art. I, sec. 17.
Department of State Lands v. Pettibone (1985), 216 Mont. 361, 702
P.2d 948. Pettibone recognizes that the State's ability to affect
existing and recognized water rights survives the adoption of
Article IX, Section 3(1), of the Montana Constitution.
The United States Supreme Court held:
Even with respect to vested property rights, a
legislature generally has the power . . .
to condition
their continued retention on performance of certain
4
affirmative duties. As long as the . . . duty imposed is
a reasonable restriction designed to further legitimate
legislative objectives, the legislature acts within its
powers in imposing such... duties. (citations omitted)
United States v. Locke (1985), 471 U.S. 84.
We conclude that Article IX, Section 3(1), of the Montana
Constitution does not establish that pre-1973 water rights are
immune from sovereign powers. These rights, like other property
rights, are protected against unreasonable state action; however,
they have not been granted indefeasible status. Furthermore, we
conclude that consistent with Article IX, Section ,
3 (1) of the
Montana Constitution, the State Legislature may enact
constitutionally sound regulations including the requirement for
property owners to take affirmative actions to maintain their water
rights.
11.
Does 5 85-2-226, MCA, violate the due process clauses of
Article 11, Section 17, of the Montana Constitution and the
Fourteenth Amendment of the United States Constitution?
Section 85-2-226, MCA, states in full:
Abandonment by failure to file claim. The failure to file
a claim of an existing right as required by 85-2-221
establishes a conclusive presumption of abandonment of
that right.
The appellants contend the conclusive presumption of 5 85-2-
226, MCA, violates due process because it fails to provide an
opportunity to rebut the presumption of abandonment. The
appellants rely on the United States Supreme Court ruling that the
Due Process Clause forbids denying an individual a right on the
basis of an irrebuttable presumption when that presumption is not
5
necessarily or universally true in fact. Vlandis v. Kline (1973),
412 U.S. 441.
The appellants note that abandonment, as historically defined
by this Court, has always at least required a showing of non-use.
Tucker v. Jones (1888), 8 Mont. 225, 19 P. 571; 79 Ranch, Inc. v.
Pitsch (1983), 204 Mont. 426, 666 P.2d 215. Appellants argue that
their failure to file is related to various mistakes and has
absolutely nothing to do with non-use. Because the appellants have
maintained continuous and beneficial use of their water rights,
they allege that the presumption of abandonment for failure to
timely file is neither necessarily nor universally true in fact and
that therefore, 5 85-2-226, MCA, is constitutionally infirm.
The Montana Legislature has defined, for the limited purpose
of establishing existing water rights, that failure to file a claim
will be construed as abandonment of that claim. Section 85-2-226,
MCA. While this definition of abandonment does not appear to
parallel this Court's previous definition of abandonment, it is
within the province of the legislature to enact such a definition.
Legislatures can enact substantive rules of law that treat property
as forfeited under conditions that the common law would not
consider sufficient to indicate abandonment. United States v.
Locke (1985), 471 U . S . 84, 106, citing Hawkins v. Barney's Lessee,
(1831) 5 Pet. 457, 467.
All water claimants were provided more than ample notice and
given expanded opportunity to file a claim. Section 85-2-226, MCA,
makes clear that failure to file in a timely fashion establishes
6
that the water right claimant has abandoned their right. We cannot
say that it is impermissible for the legislature to construe a
failure to file as the intention of the water right holder to
discontinue use of that right.
In Vlandis, the Connecticut Legislature created a conclusive
presumption that a student was an out of state resident for tuition
purposes if his address at the time of admission or in the year
preceding admission was out of state. The Supreme Court determined
this to be impermissible because students were not provided
opportunity to rebut the presumption and because pre-admission
addresses did not necessarily prove nor disprove residency.
Vlandis makes it abundantly clear that:
a statute creating a presumption which operates to deny
a fair opportunity to rebut it violates the due process
clause of the Fourteenth Amendment. (Citations omitted.)
Vlandis v. Kline, 4 1 2 U.S. at 4 4 6 .
However, 5 85- 2- 226, MCA, does not operate, as did the
Connecticut statute, to deny opportunity to rebut. Water right
claimants in Montana were all properly notified and had the
opportunity to rebut the presumption of abandonment by filing a
claim. In contrast, the Connecticut students had no recourse
whatsoever and could do nothing to prevent the triggering of the
presumption. The Court, in Vlandis, noted that a student's
address at the time of admission was an arbitrary method of
determining residency.
Other examples of when the Supreme Court has struck down laws
creating impermissible conclusive presumptions include a law
providing that teachers are unable to perform their duties when
7
they are more than 4 months pregnant, Cleveland Board of Education
v. LaFluer ( 1 9 7 4 ) 414 U.S. 632; and that unwed fathers are unfit to
be parents, Stanley v. Illinois (1972) 405 U.S. 645. These
presumptions, as in Vlandis, created factual conclusions as a
matter of law which the court ruled could only be accurately made
through individualized determinations. As such, the conclusions
were arbitrary and not necessarily true. In the instant case, the
legislative definition of abandonment, as used in 5 85- 2- 226, MCA,
does not require any individualized determinations. The definition
applies the same to all people who filed after the deadline. The
only individualized determination necessary is to establish whether
the deadline was met. Hearings are already provided by the Water
Court for this purpose.
Finally, the appellants argue that:
The State's interest in administrative ease and
certainty cannot, in and of itself, save the conclusive
presumption from invalidity under the Due Process Clause
where there are other reasonable and practicable means of
establishing the pertinent facts on which the state's
objective is premised. Vlandis v. Kline, 4 1 2 U.S. at
451.
Unlike the cases cited above where hearings are a more
reasonable and necessary alternative; no more reasonable
alternative is provided or necessary in the instant case. The
appellants suggest that the presumption should be rebuttable and
merely shift the burden to the late claimants to prove they did not
in fact abandon their rights. The legislature chose not to create
a rebuttable presumption, a constitutionally permissible decision.
We conclude the conclusive presumption created by § 85- 2- 226,
8
MCA, is valid under the Due Process Clause.
The Water Court, in reliance on the United States Supreme
Court, ruled that despite the use of the word abandonment, 5 85-2-
226, MCA, is a forfeiture statute. United States v. Locke (1985),
471 U.S. 84; Texaco, Inc. v. Short (1982), 454 U.S. 516. Locke
involved the constitutionality of section 314 (c) of the Federal
Land Policy and Management Act of 1976 (FLPMA), 43 U.S.C. 1744(c),
which required holders of mining claims to file, prior to December
31 of every year, a notice of intention to continue holding the
mining claim. Locke filed notice one day past the deadline and his
claim (worth several million dollars) was deemed abandoned. Locke
challenged the constitutionality of the law on several grounds
including that the statute created an irrebuttable presumption
which violated due process.
Section 314(c) of FLPMA provides:
.
The failure to file such instruments as required.. shall
be deemed conclusively to constitute an abandonment of
the mining claim. ...
Locke argued that the failure to timely file a claim should not
extinguish the claim, but merely shift the burden to the claimant
to prove the claims were not abandoned. The Supreme Court held:
Although 5314(c) is couched in terms of a conclusive
presumption of "abandonment", there can be little doubt
that Congress intended 5314 (c) to cause a forfeiture of
all claims for which the filing requirements ...
had not
been met.
* * * * * *
5314 (c) presumes nothing about a claimant's actual
intent: the statute simply and conclusively deems such
claims to be forfeited. ...there is nothing to suggest
that ... Congress was in any way concerned with whether
9
a particular claimant's tardy filing or failure to file
indicated an actual intent to abandon the claim. Locke,
471 U.S. at 98, 103.
Finally, in Locke, the Court held that forfeiture statutes are "not
subject to the individualized hearing requirement of such
irrebuttable presumption cases as Vlandis v. Kline. . . 'I Locke ,
471 U.S. at 103.
The appellants argue that Locke is not controlling and
attempt to distinguish Locke on several grounds. They argue that
§314(c) FLPMA, was enacted for a different purpose, does not effect
a constitutionally recognized and confirmed right such as Montana's
water rights, and that it fulfills the policies being promoted by
FLPMA while the policies of the Water Use Act of Montana are not
fulfilled by 3 85-2-226, MCA. We disagree. The interests of the
federal government recognized in Locke and the interests of
Montana, with regards to water rights, are similar. Section 85-2-
226, MCA, uses nearly identical language as 5 314(c) FLPMA, and we
agree with the Water Court that Locke is controlling.
The Supreme Court, in Texaco, Inc., provided a framework for
the constitutional analysis of a file or forfeit statute. Texaco,
I C (1982), 454 U.S.
n. 516. The framework was adopted in both its
"substantive and procedural dimensions," and we adopt it here.
Locke 471 U.S. at 103. In Texaco, Inc., the Supreme Court upheld
the Indiana 'Mineral Lapse Act' which required that a statement of
claim be filed on any mineral interest that had been unused for 20
years or the interest would be extinguished. The Supreme Court
held that a forfeiture statute must provide all procedural
10
safeguards constitutionally due and that it must be a legitimate
exercise of the state's police power such that the substantive
effect of the statute does not work an impermissible intrusion on
constitutionally protected rights. Texaco Inc. v. Short (1982),
454 U.S. 516.
Montana has a long tradition of strictly adhering to the
procedural requirements of hearing and notice. Ball v. Gee (1990),
243 Mont. 406, 795 P.2d 82. In Ball, we held that 'Ithe forthright
command of the due process clause; [is] one deprived of his
property must be given notice and an opportunity to defend." m,
243 Mont. at 413.
The sufficiency of the publication of notice concerning the
filing deadline has not been challenged by the appellants.
Notification of the deadline was published in all of Montana's
daily newspapers and in at least one newspaper in each Montana
county in July of 1979, April of 1980 and again in April of 1981.
Notice was posted conspicuously in each county courthouse.
Finally, notice was included with all statements of property tax,
mailed by county treasurers, in 1979, 1980, 1981, and 1982. When
the filing deadline was extended from January 1, 1982 to April 30,
1982, notice was published once per week for three successive weeks
in all Montana daily newspapers and a weekly newspaper in each
county. Notice of the extension was also posted conspicuously in
every county courthouse. In addition, the Department of Natural
Resources published and distributed more than 10,000 copies of a
document regarding how and when to file a claim. Representatives
11
of the Water Court traveled to numerous meetings across the State
to further discuss the manner, method, and filing date for claims.
Judge Lessley noted that of the 205,000 claims filed statewide,
more than 98% were filed on time. Such notice indisputably
satisfies due process requirements.
The appellants contend that § 85- 2- 226, MCA, operates in a
manner that deprives those with a vested property right an
opportunity to have their day in court before that right is
divested. The appellants argue that before they can be said to
have abandoned their water right, they should have opportunity to
a hearing where they can show good cause for late filing and
demonstrate that they have not in fact abandoned their right.
All of the claimants had 35 months to file their claim. The
filing requirements were straightforward, and demanded only that a
water user document historical use. Adequate opportunity was
provided each of the claimants to show that they did not intend to
abandon or forfeit their water rights. Furthermore, the Water
Court provided an opportunity for all late claimants to request an
evidentiary hearing to determine if the deadline had in fact been
missed. We conclude that 5 85- 2- 226, MCA, complies with the
requirements of procedural due process.
We have already stated that the legislature has the power to
mandate that rights be terminated if their holders do not take the
affirmative action required by the legislature. The Court in Locke
noted that the United States is the owner of the underlying fee
title of all public lands and as such maintains broad powers over
12
the terms and conditions for which public land is used. Locke, 471
U.S. at 104. Similarly, the State of Montana owns the underlying
fee to all of the water in the State and thereby retains
substantial regulatory power over water rights. Art. IX, Sec.
3(3), 1972 Mont.Const.: State v. McDonald, 220 Mont. 519, 524, 772
P.2d 598. However, the regulatory power must be exercised
consistent with principles of substantive due process.
A statute must be reasonably related to a permissible
legislative objective to satisfy substantive due process
guarantees. State v. Turk (1982), 197 Mont. 311, 643 P.2d 224.
The 1972 Montana Constitution mandates that the legislature
"establish a system of centralized records." There can be no doubt
that 5 85-2-226, MCA, was enacted for a permissible legislative
objective.
However, the appellants challenge whether or not 5 85-2-226,
MCA, is reasonably related to the objective of adjudicating water
rights. It is contended that the Montana Constitution is a mandate
for the preservation of water for the use of Montanans and the
recognition and confirmation of all existing water rights. Section
85-2-226, MCA, allegedly fails to be reasonably related to the
these objectives, because its operation results in the elimination
of existing water rights.
Before water rights can be adjudicated state wide, it is
essential that existing rights first be firmly established.
Section 85-2-226, MCA, is a reasonable means of compelling
comprehensive participation, extinguishing duplicative and
13
exaggerated rights, and ridding local records of stale, unused
water claims. These are all necessary to meet the objective of
adjudicating Montana's water. Furthermore, the filing duty is
neither burdensome, unreasonable nor unrelated to the legitimate
and proper legislative objectives as provided above. We note that
neither the Supreme Court nor other states addressing the
constitutionality of statutes requiring filing, have found the
filing requirement to be more than a minimal burden. U.S. v. Locke
(1985), 471 U.S. 84; Texaco, Inc. v. Short (1982), 454 U.S. 516; In
re the Adjudication of the Water Rights of the Upper Guadalupe
Segment of the Guadalupe River Basin (Tex. 1982), 642 S.W.2d 438;
Matter of Chumstick Creek Drainage Basin (Wash. 1985), 694 P.2d
1065. In Locke, the Court held:
Appellees failed to inform themselves of the proper
filing deadline and failed to file in timely fashion the
documents required by federal law. Their property loss
was one appellees could have avoided with minimal burden:
...
We therefore conclude that 5 85-2-226, MCA, satisfies the
guarantees of substantive due process.
111.
Does forfeiture of water rights under 5 85-2-226, MCA,
constitute a taking without just compensation in violation of the
Montana and United States Constitutions?
The threshold inquiry for the takings claim is whether 5 85-
2-226, MCA, is a constitutionally valid exercise of the state's
police power. We note that, in addition to being a separately
raised issue, the inquiry was part of the Texaco, Inc. analysis for
14
constitutional validity of a forfeiture statute as described above.
The police power of the state is that which enables states to
pass regulations for the health, safety and general welfare of the
people. Yellowstone Valley Electric v. Ostermiller (1980), 187
Mont. 8, 608 P.2d 491. The police power regulation:
must be reasonably adapted to its purpose and must injure
or impair property rights only to the extent reasonably
necessary to preserve the public welfare. (Citation
omitted.) ... Compensation is due . .
. in cases which
exceed regulation or impairment and there is an
appropriation of property which amounts to a taking or
deprivation of property for public use. Yellowstone
Valley Electric, 187 Mont. at 15, 16 Am.Jur.2d
Constitutional Law 5 586.
It is undisputed that "quantification of the total water
rights in the State of Montana is an expressed and necessary
objective under the constitutional mandate for centralized records
and is within the police power of the state." (Citation omitted.)
McDonald v. State (1986), 220 Mont. 519, 529, 722 P.2d 598, 604,
However, the appellants contend that 5 85-2-226, MCA, constitutes
an unconstitutional taking because invalidating existing water
rights for failure to file extends beyond what is reasonably
necessary to preserve the public welfare.
The taking argument fails for much the same reasons that the
statute fulfills the guarantees of substantive due process. The
filing requirement of 5 85-2-226, MCA, could have been fully
satisfied without any depravation of the owner's interest in and
enjoyment of their property. The act of filing on time is not an
unreasonable nor onoris burden and it does not deprive
appropriators of the right to use water. It is the failure to file
15
on time, not the action of the State, that causes a property right
to be extinguished. Texaco, Inc. v. Short (1982), 454 U.S. 516; In
re Adjudication of the Water Rights of the Upper Guadalupe Segment
of the Guadalupe River Basin (Tex. 1982), 642 S.W.2d 438; Matter of
Chumstick Creek Drainage Basin (Wash. 1985), 694 P.2d 1065. The
depravation occurs only as a result of the appropriators neglect or
the neglect of their predecessors.
In Locke, the Supreme Court held:
it was their failure to file on time--not the action of
Congress--that caused the property right to be
extinguished. Regulation of property rights does not
lltakell
private property when an individualI s reasonable,
investment-backed expectations can continue to be
realized as long as he complies with reasonable
regulatory restrictions the legislature has imposed.
Locke, 471 U.S. at 107. (Citations omitted.)
In Texaco Inc., the Court held:
In ruling that private property may be deemed to be
abandoned and to lapse upon the failure of its owner to
take reasonable actions imposed by law, this Court has
never required the State to compensate the owner for the
consequences of his own neglect. Texaco, Inc., 454 U.S.
at 530.
We conclude, water rights, when forfeited under 5 85-2-226,
MCA, are forfeited as a result of owner negligence and not as a
result of excessive and unreasonable state action. Section 85-2-
226, MCA, does not result in taking property without just
compensation and therefore the Water Court is affirmed.
We further conclude that 5 85-2-226, MCA, is a proper exercise
of the police power, satisfies all of the guidelines necessary to
enact a forfeiture statute and complies with all aspects of due
process as required by the Montana Constitution and the
16
Constitution of the United States.
IV .
Does fi 85- 2- 226, MCA, violate the equal protection clause of
the Montana Constitution?
"When a statute is challenged on equal protection grounds, the
first step is to identify the classes involved and determine
whether the classes are similarly situated.'' Matter of C.H.
(1984), 210 Mont. 184, 198, 683 P.2d 9 3 1 , 938. The appellants
contend the arbitrary deadline enforced by fi 85- 2- 226, MCA, is an
arbitrary date that unreasonably divides water claimants into two
classes. One class retains their water right while the other
class, late claimants, lose theirs without opportunity to show good
cause for late filing. The appellants suggest that this
classification discriminates against persons like themselves, who
in good faith attempted to meet the statutory requirements.
We are not persuaded and do not find that fi 85- 2- 226, MCA,
creates different classes. All claimants were treated equally,
provided equal notice, and given equal opportunity to file by the
given deadline. The classification the appellants rely on is
created by the appellants' own negligence. We conclude that fi 85-
2- 226, MCA, was applied evenhandedly to all water claimants.
Therefore, the equal protection challenge fails and the Water Court
is affirmed.
V.
Does 5 85- 2- 226, MCA, constitute an impairment of contracts in
17
violation of Article 11, Section 31, of the Montana Constitution
and Article I, Section 10, of the United States Constitution?
The appellants maintain § 85-2-226, MCA, renders invalid
water rights upon which "substantial contractual relationships are
based" and therefore violates the impairment of contracts clause.
The appellants make no discernable argument nor provide an example
of any contract alleged to be impaired.
Montana has adopted a three part test to determine whether
legislation has violated the impairment of contracts clause.
Western Energy Company v. Genie Land Company (1987), 227 Mont. 74,
737 P.2d 478; Nee1 v. First Federal Savings and Loan Association
(1984), 207 Mont. 376, 675 P.2d 96; Energy Reserves Group, 'Inc. v.
Kansas Power and Light Co. (1983), 459 U.S. 400, "The threshold
inquiry is whether the state law has, in fact, operated as a
substantial impairment of the contractual relationship." Western
Enerqy Co., 227 Mont. at 82. (Citations omitted.) Implicit in
this inquiry is the existence of a contract. The appellants have
failed to demonstrate the existence of any specific contract let
alone its impairment. This is fatal to appellants' claim.
We conclude 5 85-2-226, MCA, does not impair contracts in
violation of the United States and Montana Constitutions. The
Water Court is affirmed. n
We Concur:
-T-----
'Chief Sustice
D i s t r i c t Judge Leonard HPLangen
s i t t i n g f o r J u s t i c e Karla M. Gray
19
Justice John Conway Harrison, dissenting.
I dissent. Few cases have come before this Court of more
import to the citizens of this state, particularly those who make
their living through agriculture, than this case. Without water
farms and ranches in this State economically cannot exist. It is
my position that under Article IX, Section 3 of the Montana
Constitution, pre-1973 water rights are protected from legislative
forfeiture. Article IX, Section 3 provides in its entirety:
Water rights. (1) All existing rights to the use of any
waters for any useful or beneficial purpose are hereby
recognized and confirmed.
(2) The use of all water that is now or may
hereafter be appropriated for sale, rent, distribution,
or other beneficial use, the right of way over the lands
of others for all ditches, drains, flumes, canals, and
aqueducts necessarily used in connection therewith, and
the sites for reservoirs necessary for collecting and
storing water shall be held to be a public use.
(3) All surface, underground, flood, and atmospher-
ic waters within the boundaries of the state are the
property of the state for the use of its people and are
subject to appropriation for beneficial uses as provided
by law.
(4) The legislature shall provide for the
administration, control, and regulation of water rights
and shall establish a system of centralized records, in
addition to the present system of local records.
Appellants contend that subsection (1) provides a guarantee of
existing water rights and any statutory scheme that obviates that
guarantee is against the public policy of Montana. I agree. The
constitution gives the power to the legislature to affirm and
preserve existing water rights, but I disagree with the holding of
the majority in that it does not give the legislature the power to
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affirm or extinguish existing water rights.
Here, each of the appellants exercised his or her rights to
the evidentiary hearings and each alleged different factual
circumstances for having filed late (i.e., improper address on the
claim form, lessor's neglect, and owner's absence). Evidence was
presented by each appellant of a historical and continued use of
water for various beneficial uses. The appellants contended that
they in no way had "abandoned" their water rights. The court
determined that each had filed late under 5 85-2-226, MCA, and,
therefore, had forfeited his or her claim. Examining the testimony
of each of the appellants, I would have found a factual exception
and, therefore, would not have declared the law constitutional. I
do not find that the constitution delegates the power of forfeiture
or extinguishes existing rights, but as I read it, it affirms and
attempts to preserve those existing rights. The fact that the
legislature is mandated to complete a record of all existing rights
does not give the legislature the power to extinguish rights that
are implicitly confirmed by our constitution.
DELEGATE DAVIS: . . . The whole purpose, just for
the purpose of the journal, is to establish, in the first
sentence, that all existing water rights are recocrnized
and confirmed--so no one will get any idea that we're
trying to take away any vested or existing rights. ...
[Emphasis added.]
Verbatim Transcript, Montana Constitutional Convention, Vol. V, p
1302 (1971-1972).
Here, the appellants argue that public policy of protecting
existing rights by preserving the present and existing system of
local control is further supported by the constitutional mandate of
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Article IX, Section 3(4), which establishes the centralized system
"in addition to the present system. . . . 11
Two cases of this Court since the 1972 Constitutional
Convention: General Agric. Corp. v. Moore (1975), 166 Mont. 510,
534 P.2d 859, and McDonald v. State (1986), 220 Mont. 519, 722 P.2d
598, are cases, which, in my opinion, reaffirm the public policy of
our constitution that confirms all water rights acquired under the
1889 constitution. Therefore, I would find that the legislature
has acted unconstitutionally by enacting and adjudicating a
procedure that abolishes a right granted by the Montana
Constitution. Also, I would hold that any legislative act that
operated to extinguish the pre-1973 water rights that had been
confirmed by the 1972 constitution is contrary to the intent of the
framers and, therefore, against public policy.
In addition, the appellants argue, and I agree, that
abandonment, as historically defined by this Court, has always
required at least a showing of non-use. See Tucker v. Jones
(1888), 8 Mont. 225, 19 P. 571; 79 Ranch, Inc. v. Pitsch (1983),
204 Mont. 426, 666 P.2d 215. In those cases it is argued that the
failures of those plaintiffs to file was related to various
mistakes that had nothing to do with non-use. Here, the appellants
have maintained continuous and beneficial use of their water
rights. Failing to timely file does not imply that appellants have
ceased to beneficially use their water rights. The majority
adopted a presumption of abandonment for failure to timely file:
this presumption is neither necessary nor true in fact, and for
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that reason 5 85-2-226, MCA, is constitutionally infirm.
In the instant case, the respondents contend that the Water
Court's characterization of 5 85-2-226, MCA, as a forfeiture
statute, is accurate and fully supported by the United States
Supreme Court. United States v. Locke (1985), 471 U.S. 84, 105
S.Ct. 1785, 85 L.Ed.2d 64; Texaco, Inc. v. Short (1982), 454 U.S.
516, 102 S.Ct. 781, 70 L.Ed.2d 738. I cannot agree with the
respondents' assertion that both Locke and Texaco, Inc. refute the
appellants' argument that an irrebuttable presumption exists in
!j 85-2-226, MCA.
Locke involves the constitutionality of 5 314(c) of the
Federal Land Policy and Management Act of 1976, 43 U.S.C.
5 1744(c), which requires holders of mining claims to file, prior
to December 31st of each year, a notice of intention to continue
holding the mining claim. In Locke, Locke filed a notice one day
past the deadline and his claim was deemed "abandoned." Locke
challenged the constitutionality of the law on several grounds,
including that the statute created an irrebuttable presumption
which violated due process. Section 314 of FLPMA provides:
"[Flailure to file such instruments as required . . . shall be
deemed conclusively to constitute an abandonment of the mining
claim." Locke argued that the failure to timely file a claim
should not extinguish the claim, but merely shift the burden to the
claimant to prove the claim was not abandoned. There the Supreme
Court held, lr[a]lthough 5 314(c) is couched in terms of a
conclusive presumption of 'abandonment,' there can be little doubt
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that Congress intended 5 314(c) to cause a forfeiture of all claims
for which the filing requirements . . . had not been met." Locke,
471 U . S . at 98, 105 S.Ct. at 1794, 85 L.Ed.2d at 78.
In my opinion, the Locke decision is distinguishable and,
therefore, not controlling. First, the appellants in their
arguments, distinguish the purposes of FLPMA and Montana's Water
Use Act. The purpose of FLPMA as articulated in Locke is allegedly
to rid the federal lands of stale claims and to extinguish unused
interest. In this case, to the contrary, the purpose of Montana
law is to recognize and confirm all existing water rights. Second,
the interests subject to the federal statute are not
constitutionally recognized and confirmed as are the Montana
interests. Third, the Montana statute allegedly fails to further
the purpose of the Water Use Act and is, therefore, against the
interest and the welfare of Montana's citizens. Section 314(c)
allegedly complies with the goals of FLPMA and furthers the
interest being pursued. Fourth, 5 85-2-226, MCA, operates in
judicial proceedings while the federal statute does not. Fifth,
the federal statute was characterized as a forfeiture statute which
the appellants contend our Montana statute is not.
In addition, the interest of the federal government recognized
in Locke and the interest in Montana with regard to water rights,
it is argued, are similar. The majority concludes that 5 314(c)
and 5 85-2-226, MCA, are nearly identical and that the Supreme
Court's analysis should be controlling. In Locke, the Supreme
Court delineated a three-point test to determine when the
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forfeiture statute passes constitutional muster. Two parts of the
test address substantive and procedural due process. The third
part of the test asks the question whether the legislature has the
power to mandate that rights be terminated if the holders do not
take affirmative action required by the legislature. In other
words, part three asks if § 85- 2- 226, MCA, is a lawful exercise of
the State's police power.
I would hold that the statute does not satisfy the applicable
constitutional test determined by Locke, and I would note there is
a considerable difference between an unpatented mining claim and a
water right that has been historically recognized by this Court
prior to the majority's opinion.
I would, therefore, reverse and remand this matter to the
Water Court for further hearings on the fact situations presented
by the appellants.
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Justice Terry N. Trieweiler specially concurring.
I agree with the result arrived at by the majority. However,
I am unable to agree with everything that is said in the majority
opinion.
My particular concern is with Part I1 of the majority opinion.
I cannot as easily as the majority reconcile the U.S. Supreme
court's decisions in Vlandisv.Mine (1973), 412 U.S. 441, and United
States v. Locke (1985), 471 U.S. 84. To me these decisions are
inconsistent. Vlandis would seem to require reversal of the Water
Court decision forfeiting appellant's water rights because
5 85- 2- 226, MCA, creates an irrebuttable presumption of abandonment
which is not universally true. However, in Locke the Supreme Court
calls an abandonment a forfeiture and thereby arrives at a
different result. Since Locke is the more recent and factually
specific case, I agree that it is controlling on the due process
issue. However, I do not agree with the reasoning in Locke, nor do
I agree with the majority's willingness to so easily distinguish
Vlandis .
26