April 17 2012
DA 11-0545
IN THE SUPREME COURT OF THE STATE OF MONTANA
2012 MT 81
TOWN OF MANHATTAN,
Petitioner and Appellant,
v.
DEPARTMENT OF NATURAL RESOURCES AND
CONSERVATION OF THE STATE OF MONTANA,
Respondent and Appellee.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and For the County of Gallatin, Cause No. DV-09-872C
Honorable John C. Brown, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Matthew W. Williams; Williams & Jent, Bozeman, Montana
Jane Mersen; Kasting, Kauffman & Mersen, P.C., Bozeman, Montana
For Appellee:
Brian C. Bramblett, Anne W. Yates, Candace F. West; Special Assistant
Attorneys General, Montana Department of Natural Resources and
Conservation, Helena, Montana
For Amici Curiae:
Stephen R. Brown; Garlington, Lohn & Robinson PLLP, Missoula,
Montana (for Mountain Water Company)
Laura S. Ziemer, Attorney at Law, Meg Casey, Legal Intern, Bozeman,
Montana (for Trout Unlimited); David Weaver, Attorney at Law, Bozeman
Montana (for Association of Gallatin County Irrigators)
Holly Jo Franz, Franz & Driscoll, PLLP, Helena, Montana (for Montana
Farm Bureau Federation, Montana Water Resources Association and
PPL, Montana, LLC)
Submitted on Briefs: March 21, 2012
Decided: April 17, 2012
Filed:
__________________________________________
Clerk
2
Chief Justice Mike McGrath delivered the Opinion of the Court.
¶1 The Town of Manhattan, Montana, appeals from the District Court’s “Order Re
Petition for Judicial Review” filed August 17, 2011. We affirm.
PROCEDURAL AND FACTUAL BACKGROUND
¶2 In 2008 the Town filed an application with the Montana Department of Natural
Resources and Conservation pursuant to § 85-2-402, MCA, seeking approval for
proposed changes to its municipal well water rights. The Town sought to designate
several of its wells as alternate points of diversion for existing water claims it filed in the
water rights adjudication process. The Town’s existing claims are reflected in a 1985
Temporary Preliminary Decree from the Water Court. The Town sought authorization to
withdraw a total of 646 acre feet of water per year from any combination of five wells,
and to expand its place of use to include the geographic area within which the Town is
authorized to adopt a growth policy under § 76-1-601, MCA. The 1985 Decree indicates
that the flow rate and total volume of water attributed to the Town’s water rights were
based upon the Town’s claims, not upon actual use, and were subject to adjustment in the
final adjudication. The Town’s well water rights involved in this case are all pre-July 1,
1973 rights.
¶3 In March, 2009, the DNRC notified the Town that its application for approval of
the changes was deficient because it did not contain information required by Admin. R.
M. 36.12.1902, describing how the Town used its water rights prior to the effective date
of the Water Use Act on July 1, 1973. The DNRC asked for a map showing the Town’s
3
service area, a list of each water hook-up and the volume of water delivered to each hook
up, as those conditions existed prior to July 1, 1973. The Town did not provide the
information on historical use of its rights, contending that the information was irrelevant
to its application because the Town’s water rights included the right to expand water use
as needed for continued municipal growth.
¶4 In June, 2009, the DNRC determined that the Town’s application for approval of
the changes was not correct and complete as required by § 85-2-302, MCA, because the
Town had not furnished the historical use information. In August, 2009 the DNRC
informed the Town that its application was terminated because it was not correct and
complete. In September, 2009, the Town filed a petition for judicial review of the
DNRC’s actions. The Town sought an order from the District Court that the DNRC be
required to process its application for approval of the changes without the requested
information on historical use. The District Court held in favor of the DNRC and this
appeal followed.
STANDARD OF REVIEW
¶5 The standard of review of an administrative decision is set out in § 2-4-704, MCA.
In the Matter of the Application for Change by Royston, 249 Mont. 425, 432, 816 P.2d
1054, 1060 (1991). In summary, a reviewing court may not substitute its judgment for
the judgment of the agency as to the weight of the evidence on issues of fact, but may
reverse or modify the decision if the substantial rights of the petitioner have been
violated. Section 2-4-704(2), MCA. The District Court found that the ultimate issue in
this case was an issue of law, and issues of law are reviewed to determine whether the
4
decision was correct. Hughes v. Board of Medical Examiners, 2003 MT 305, ¶ 11, 318
Mont. 181, 80 P.3d 415.
DISCUSSION
¶6 The issue on appeal is whether the District Court properly affirmed the decision of
the DNRC to terminate the Town’s application for approval of changes to its water rights.
¶7 The Montana Legislature enacted the Montana Water Use Act, §§ 85-2-101 et
seq., MCA, to provide for the administration, control and regulation of water rights in
Montana. The Act was effective July 1, 1973 and is premised upon Art. IX, sec. 3 of the
Montana Constitution, which provides that “[a]ll existing rights to the use of any waters
for any useful beneficial purpose are hereby recognized and confirmed.” The Act defines
an “existing right” as one that would be protected under the law as it existed prior to July
1, 1973. Section 85-2-102(12), MCA. As noted, the Town’s well water rights at issue in
this case are all pre-July 1, 1973 “existing rights.”
¶8 A person may make a change in an existing water right, such as changing the point
of diversion or the place of use, only after obtaining approval of the DNRC as provided
in § 85-2-402, MCA. Even though the Montana Constitution recognizes and protects
existing rights, it does not exempt them from the requirement of DNRC approval of a
proposed change. Royston, 249 Mont. at 429, 816 P.2d at 1057. The Act requires that
the applicant for approval of a change must prove by a preponderance of the evidence
that the change will not adversely affect other water users; that the means of diversion,
construction and operation are adequate; that the use is a beneficial use; and that the
applicant has a possessory interest in the place of use. Section 85-2-402(2), MCA;
5
Hohenloe v. DNRC, 2010 MT 203, ¶¶ 32-34, 357 Mont. 438, 240 P.3d 628. An
underlying water right is not affected by action on an application for a change, and the
DNRC may not adjudicate water rights in deciding an application for a change.
Hohenlohe, ¶ 28; Royston, 249 Mont. at 430, 816 P.2d at 1058.
¶9 The process of obtaining approval for a change in an existing water right begins
with filing a “correct and complete” application, complying with rules adopted by the
DNRC. Section 85-2-302, MCA. The Act provides that a correct and complete
application is one that provides probable, believable facts sufficient to support a
reasonable legal theory upon with the DNRC should proceed. Sections 85-2-102(8) and
(22), and 85-2-402(1)(a), MCA. Upon notification by the DNRC that an application for
approval of a change is deficient, the applicant has 90 days to correct and complete the
application. If this is not done, the application is terminated as a matter of law. Section
85-2-302(7), MCA.
¶10 As provided by § 85-2-402(14), MCA, the DNRC has adopted rules to implement
the statutory requirements for approval of a change in a water right, including Admin. R.
M. 36.12.1902. That rule requires that for pre-July 1, 1973 existing rights, the applicant
for approval of a change must provide “historic information” on the underlying water
right “as it was used prior to July 1, 1973.” Admin. R. M. 36.12.1902(1)(a). The
required details of historic use are set forth in Admin. R. M. 36.12.1902(7), and they
relate to the DNRC’s obligation to ensure that a change will not adversely affect other
water rights, § 85-2-402(2), MCA. Further, it is an established tenet of Montana water
law that an appropriator’s right attaches to “waters actually taken and beneficially
6
applied.” Quigley v. McIntosh, 110 Mont. 495, 509, 103 P.2d 1067, 1074 (1940);
Hohenloe, ¶ 43. Existing (pre-July 1, 1973) rights entitle the user to “such an amount of
water as, by pattern of use and means of use, the owners or their predecessors put to
beneficial use.” McDonald v. State, 220 Mont. 519, 529, 722 P.2d 598, 604 (1986).
¶11 The Town does not attack the validity of the DNRC rule, but argues that historical
use information is irrelevant and should not be applied to review the Town’s application
for approval of its proposed changes. To this end, the Town has presented extensive
argument on the nature of municipal water rights, and about how or whether historical
use information can factor into the DNRC’s analysis of the proposed changes. However,
the DNRC has not made a decision on any of the Town’s proposed changes to its water
claims, and the Town’s application was terminated. Unless the Town submits a correct
and complete application for approval of its proposed changes, and the DNRC makes a
decision on the application, these issues are not ripe for a decision from this Court.
¶12 Based upon established Montana law and the applicable regulations, the DNRC
was within its lawful authority to request that the Town provide information on its use of
water prior to July 1, 1973 as part of its application for approval of its proposed changes.
At the same time, if the Town submits a new application, the historical information
required by the DNRC must be no more than is necessary, on a case-by-case basis, to
meet the statutory analysis required by § 85-2-402, MCA. Hohenloe, ¶ 65.
¶13 The decision of the District Court is affirmed.
/S/ MIKE McGRATH
7
We concur:
/S/ BRIAN MORRIS
/S/ MICHAEL E WHEAT
/S/ JIM RICE
/S/ BETH BAKER
/S/ PATRICIA COTTER
/S/ JAMES C. NELSON
8