Montana Water Court

The Montana Territory was created on May 26, 1864. In 1885, the Montana territorial legislature enacted legislation establishing the first system of water rights for surface water. Under the law, surface water could only be diverted if it was done so for "beneficial use". An individual could establish their water rights merely by posting a notice at the point of diversion, and filing a letter with the county clerk and county recorder. This became known as a "filed right". Filed rights were subject to extensive abuse, as filers routinely exaggerated the amount of water taken and there was no means of challenging the claim of beneficial use.[1] The law also recognized another means of securing surface water rights, which became known as "use rights". Use rights required no filing or posting, merely the appropriation of water and its application for a beneficial use.[lower-alpha 1] Use rights were also regularly abused, as there was no record of them and deceit about the date and amount of appropriation was widespread.[2] By 1974, between 60 and 70 percent of all water rights in Montana were use rights.[3][4]

The 1885 law also gave territorial officials the authority to engage in inter se ("including all parties") proceedings regarding a given source of surface water whenever conflict emerged. The official could establish who had water rights, how much water they were entitled to, and which rights had priority. This authority was never exercised.[5]

Decentralized record-keeping created a huge number of problems. Watersheds routinely became "oversubscribed" (that is, water users claimed the right to more water than was in the stream).[6][7] The expansion in the number of counties in the state led to the mismanagement of water rights records as county archives were split up, and many records were lost. Other records were lost when county courthouse suffered fires.[6][lower-alpha 2]

The Milk River in Montana, subject of the U.S. Supreme Court decision in Winters v. United States.

Montana became a state on November 8, 1889. Article III, §15 of the 1889 constitution provided that "The use of all water now appropriated...shall held to be a public use."[8] Although a number of attempts were made over the next 90 years to create a centralized water rights system, beginning in 1903, voters in the state feared the creation of a large state bureaucracy and the legislature defeated every attempt.[6]

In 1908, the Supreme Court of the United States held in Winters v. United States, 207 U.S. 564 (Sup.Ct. 1908). that Native American tribes had reserved "adequate water to satisfy the purposes for which the Reservation was created". Moreover, it was the duty of the U.S. federal government to protect these water rights. This created what are known as "Winters rights", of federally-reserved Indian water rights. The case was of particular importance to Montana because it involved the Fort Belknap Indian Reservation in the north-central part of the state.[9]

In 1921, the Montana Legislature adopted a new surface water rights law. This legislation recognized that some streams might be "fully adjudicated"; in other words, all the water may be appropriated by existing users. Any new individual wishing to appropriate water from a fully adjudicated source had to obtain approval from a Montana District Court first.[4] As no stream in the state was ever fully adjudicated, this process was never activated.[5] Moreover, decentralized and haphazard record-keeping as well as ongoing utilization of use rights meant that it was almost impossible to determine if a stream was fully adjudicated, even if all water rights on the source were allocated. Indeed, it is possible that water rights were established on fully adjudicated sources.[10] The Montana Supreme Court also recognized the "first in time, first in right" doctrine of water rights in 1921 in Mettler v. Ames Realty Co., 201 P. 702 (Mont. 1921).[11][4]

Winters rights were further defined in 1939, when the U.S. Supreme Court held in Powers v. United States, 305 U.S. 527 (Sup.Ct. 1939). that Native American water rights existed independent of state law. This case had arisen on the Crow Indian Reservation in south-central Montana, and involved land now owned by non-tribal members.[12][13] The federal Ninth Circuit Court of Appeals extended Powers in United States v. McIntire, 101 F.2d 650 (9th Cir. 1939)., when it held that title to water rights reserved to tribes could be disposed of only by Congress. This case involved the Flathead Indian Reservation in the state's northwestern corner.[9][lower-alpha 3] The same year as Winters, the Montana Legislature declared it was the policy of the state to fully adjudicate all the waters of the state as soon as possible. But no action was taken.[16]

The state legislature took a step toward rectifying the situation in 1947. The legislature enacted a statute which gave the state engineer the authority to adjudicate water rights and settle disputes. However, there is no evidence that this discretion was ever exercised.[1][17] A second step was taken in 1961 when the legislature passed the state's first water rights act, and barred any new use right claims after January 1, 1962.[3]

In 1952, Congress enacted the McCarran Amendment, which permitted the federal government to waive its sovereign immunity over water rights. This waiver could be granted only if the state water rights proceeding was inter se.[18][13][lower-alpha 4]

The Montana state legislature enacted a groundwater rights claiming law in 1961. The law mimicked the 1885 filing right system. Because the 1961 legislation suffered from the same faults as the 1885 legislation, water rights established under the 1961 groundwater law proved just as difficult to verify, examine, establish, and enforce.[19]

Montana voters approved the creation of a state constitutional convention in 1971 to update and revise the 1889 constitution. By this time, water rights in the state were almost impossible to verify or enforce.[20] The Montana Supreme Court had held in State ex rel. McKnight v. District Court, 111 P.2d 292 (Mont. 1941). that inter se proceedings were not required when adjudicating water rights. This meant that even when the Montana Supreme Court ruled on a water rights conflict, there often many appropriators not bound by the decision.[1] Water rights records were dispersed (sometimes across many counties), grossly inaccurate, and incomplete. Many water rights laid claims to amounts of water that could never be used, calling into question the legality of the claim, and purchasers of water could never be sure of obtaining the amount of water they had bought.[21]

The Bighorn River in Montana. The DNRC declared the Bighorn River watershed one of five where water rights most urgently needed adjudication.

In 1972, Montana voters adopted a new constitution which greatly expanded the state's treatment of water and water rights.[22] Article IX, Section 3, Subsection 1 recognized and confirmed all existing water rights. Subsection 2 reiterated the 1889 constitution's wording, with only minor and non-substantive changes.[23] Subsection 3, however, established state ownership of all waters (atmospheric and ground, as well as surface) within the state, declared them available solely for the use of the people, and declared that appropriation of water must be for beneficial purposes.[24][23] Subsection 4 required the state to administer, control, and regulate water rights, and to establish a centralized record of such rights.[23] At no time did the 1971 constitutional convention recognize the control over Native American water rights exercised by the federal government under Winters and Powers.[22]

In 1973, pursuant to the authority provided in the new constitution, the Montana Legislature enacted the Montana Water Use Act (MWUA).[lower-alpha 5] The goal of the MWUA was to identify every groundwater source and surface watershed in the state, and to adjudicate every water claim on these sources. The law required that anyone with a water right must file that claim with the state within one year. The Montana Department of Natural Resources and Conservation (DNRC) was to administer the MWUA.[26] The DNRC identified five watersheds where water rights most urgently needed adjudication: The Armells Creek, Bighorn River, Powder River, Rosebud Creek, and Tongue River basins.[27] The scope of work soon proved overwhelming. In late 1974, based on its preliminary efforts in these five areas, the DNRC estimated there were more than 500,000 water rights claims in the entire state. The lack of records, overclaiming of water, and amount of conflict over water was so bad, to process all water rights claims would take 100 years.[28]

In 1974, the DNRC proposed legislation to amend the MWUA to require a Montana District Court to commence the adjudication proceeding, rather than the DNRC. The agency believed that a judicial, rather than purely administrative, proceeding would avoid lengthy litigation.[29]

In an attempt to pre-empt the impending change to state law, the Tsehéstáno (also known as the Northern Cheyenne) brought suit in the United States District Court for the District of Montana in January 1975 to secure their Winter rights. The federal government joined their suit in March, and initiated a separate suit on behalf of the Apsáalooke (also known as the Crow Nation) in April.[30] The state legislature amended the MWUA according to the recommendation of the DNRC during its spring 1975 session.[29] The state of Montana then filed in Montana District Court in July to begin adjudication of water rights in watersheds affecting both the Tsehéstáno and Apsáalooke. The Tsehéstáno and Apsáalooke lawsuits were consolidated by the federal court, but then stayed because of the conflict between the concurrent state and federal actions.[30] A separate case, Colorado River Water Conservation District v. United States, 424 U.S. 800 (Sup.Ct. 1976)., also involving concurrent state and federal lawsuits over water rights, was moving to the U.S. Supreme Court. The high court subsequently created a new Colorado River doctrine of abstention. The U.S. Supreme Court "made clear that absent a proper McCarran waiver of tribal sovereign immunity a Tribe cannot be joined in a state court water adjudication." The decision also extended the McCarran Amendment's waiver to Native American water rights as well.[31][32] The Supreme Court's decision in Colorado River essentially ended the two federal and one state Montana water rights cases.[30]

The Supreme Court's ruling in Colorado River motivated the Montana Legislature to enact critical amendments to the MWUA in 1979. In 1977, the DNRC began pressing for a general water adjudication law. The agency proposed that anyone who failed to register their water claim with the state would lose that claim. It recommended against the creation of a water court, and instead argued for an administrative process overseen by the agency itself. The subsequent adjudication would be inter se, to meet the requirements of the McCarran Act. Rather than act on the DNRC's proposals, the state legislature established a study committee to make recommendations to the legislature at its next session (to be held in 1979).[33] On April 4, 1979, the legislature voted to include tribal and federal as part of the state's adjudication process. The following day, the federal governments filed four lawsuits in the U.S. District Court seeking to revive the two prior lawsuits as well as initiate four others to protect the water rights of the tribes in Montana. Despite the action, the Montana Legislature enacted wide-ranging amendments to the MWUA which created a state Water Court.[34]

The 1979 amendments to the MWUA established a Water Court equivalent to Montana District Courts. The Water Court, whose headquarters were in Bozeman,[35] was given jurisdiction over all water rights claims and adjudications in the state. There was only a single Water Court in the state, but it had four jurisdictions, based on the four largest watersheds within the state boundaries:[36]

1. Yellowstone River Basin Division—This division covers the Yellowstone River and Little Missouri River watersheds, as well as all water in Carter County.
2. Lower Missouri River Basin Division—This division covers areas drained by the Missouri River below the mouth of the Marias River, as well as all water in Glacier and Sheridan counties.
3. Upper Missouri River Basin Division—This division covers areas drained by the Missouri River to the mouth of the Marias River.
4. Clark Fork River Basin Division—This division covers areas drained by the Clark Fork River and Kootenay River, as well as all water in Lincoln County.

The four judges of the Water Court were to be appointed from among the existing Montana District Court judges by the Governor of Montana.[36] The legislature made retired district court judges eligible in 1981.[37] Water judge candidates were proposed by a committee of Montana District Court judges in those judicial districts encompassed by the division.[lower-alpha 6] Each judge served an initial six-year term. After June 30, 1985, terms were four years. The MWUA amendments permitted (but did not require) the Montana Supreme Court to also appoint a Chief Judge. The Chief Judge is selected by the Chief Justice of the Montana Supreme Court from a list developed by the Montana Judicial Nomination Committee.[38]

The 1979 amendments to the MWUA provide for the appointment of special masters (known as "water masters" under the law). Water masters must have extensive experience with water law, water rights, and water use. Water masters apply water right claims examination rules adopted by the Montana Supreme Court, and must follow the Montana Rules of Civil Procedure.[39][40][lower-alpha 7]

Water masters examine nearly all the water claims, and make almost all the initial water allocation determinations. These are then reviewed by the Chief Water Judge. Only very rarely does a District Water Judge hear a case.[42]

In June 1979, the Montana Supreme Court ordered that all water rights claims be filed by April 30, 1982.[43] This resulted in roughly 219,000 water rights claims[11] in 85 sub-basins in the state of Montana.[44][7] The legislature enacted a law in 1995 allowing approximately 4,500 additional claims to be filed, although these claims may be considered only after "on time" water claims are adjudicated.[42]

The first step in adjudicating water rights claims is to have the claim verified in county or state records and (when needed) examined in the field by the DNRC.[7] The claims are then turned over to the Water Court, which assigns a water master. The water master makes a preliminary decree (also known as a "temporary preliminary decree"), in which "first in time, first in line" rights are assigned and water allocations established. The water master must issue a notice advising the public that a preliminary decree has been made, and advertise this notice. Anyone may object to a claim. The special master then decides these claims in a two-party adversarial hearing. Once all objections have been resolved, a revised decree is issued and public notice given. Public hearings follow, in which the special master will accept evidence and take testimony. The special master will incorporate the public hearing into a final decree, which is recommended to the Chief Water Judge. The Water Court then holds a trial, almost always overseen by the Chief Water Judge,[42] at the end of which objections to the rulings of the water master may be heard[35] and the final decree is rendered.[42] The Water Court has never held a trial in which all parties come together inter se.[45]

If two water appropriators come into conflict during this process, they may submit their dispute to the nearest Montana District Court. The District Court will then refer it to the Water Court, which will issue a decree for temporary relief pending final adjudication.[44]

All water rights claims will also be filed in a centralized repository, with county-level claims filed locally in each county courthouse.[46] The DNRC continues to process new applications for water rights, and occasionally makes changes to existing rights claims.[47] To file a claim for surface water requires the submission of an application to the DNRC. No permit is needed to use groundwater so long as no more than 35 US gallons (130 L) of water per minute are used, and less than 10 acre-feet (12,000 m³) per year are withdrawn. Groundwater consumption over these limits requires a permit from the DNRC.[19]

Final decrees of the Montana Water Court may be appealed to the Montana Supreme Court, but only if the claimant had objected to the preliminary decree or if the claimant's water rights were altered after the issuance of the preliminary decree. All water rights not addressed in the final decree are considered forfeit under state law.[48]

The Gallatin River near Manhattan, Montana. A preliminary decree governing 5,699 water rights claims was issued for the Gallatin River sub-basin, but objections were not resolved until 1997.

About 219,000 water rights claims[11] in 85 sub-basins were filed before the close of the filing period in 1982.[44] Every year from 1979 to 1997, the Chief Water Judge's office handled between 2,000 and 3,000 water claims.[49] Water masters handled the remainder of the claims.[42] Although verification of water claims can be swift, resolution of objections to the preliminary decree can last a decade or more. Roughly 40 to 50 percent of water rights claims have a problem with verification, priority, or an objection.[7] For example, the Gallatin River basin preliminary decree was issued on September 18, 1985. There were 5,699 water rights claims in the basin, and 1,600 objections to the preliminary decree. Those objections were not resolved until 1997.[49]

William Wallace Lessley was appointed the first Chief Judge of the Water Court in 1979. He had served as judge of the 18th Judicial District since 1949. He served as a substitute judge on the Montana Supreme Court more than 50 times and wrote more than 25 majority opinions between 1949 and 1982. In 1982, his judicial peers elected him Associate Water Judge for the Upper Missouri River Basin Division.[50] He died of a stroke in office on March 29, 1990, at the age of 82.[50][51][lower-alpha 8]

C. Bruce Loble was appointed Chief Water Judge in 1990 to serve the remaining three years of Lessley's term.[49][lower-alpha 9] During Loble's tenure, the Montana Legislature began cutting the budget of the DNRC and Water Court, which dramatically slowed claims verification and adjudication.[41]

By 2004, the Water Court had just six water masters and four clerks, and an annual budget of $1 million.[51] Full adjudication, which was to have taken 10 years, had stretched to 25 years with no firm end in sight. Preliminary decrees had yet to be issued in 30 sub-basins.[7]

The slow pace of adjudication led the Montana Legislature to direct the Environmental Quality Council (EQC) to undertake a study of the Water Court and MWUA in 2003.[lower-alpha 10] The EQC determined that the slow pace of adjudication would take another 30 to 40 years to complete, and that errors and inaccuracies were creeping into the system due to the overwhelming workload. The EQC proposed legislation in the 2005 session of the legislature which would require the DNRC to examine all water rights claims by June 30, 2015.[55] The Water Court was given until 2020 to issue all final decrees.[7] To support the Water Court, a fee was imposed on all water rights in the state.[55] The money raised by the water rights fee allowed the Water Court to expand the number of water masters to 11 and the number of clerks to six.[51] The water rights fee proved highly contentious, however. The legislature repealed the fee in 2007, but maintained the Water Court's budget by appropriating funds from the state's general revenues.[55] In 2009, a legislative study found that the adjudication process was now anticipated to end until 2028.[55]

To speed up the work of the Water Court, the state legislature approved the creation of an Associate Water Judge in 2011.[56] The Chief Water Judge retained the administrative duties and assigned cases to the Associate Water Judge, but in most other respects the two were co-judges of the Water Court.[7] Russ McElyea, a private adjudicator and real estate attorney, was nominated to be the Associate Water Judge in May 2012.[lower-alpha 11] His four-year term in office began on July 1.[7]

As the DNRC moved more swiftly on examining water rights claims, it had less work to do. However, Chief Water Judge Loble advised the legislature that roughly 90,000 water claims adjudicated in the early 1980s needed to be re-adjudicated. The Water Court recognized that its early work had not been standardized, and potentially could create extensive litigation once revised preliminary decrees were issued. To assist the Water Court in meeting these needs, the 2013 legislature approved legislation to shift funds and personnel from the DNRC to the Water Court.[55]

Chief Judge Loble retired in July 2013.[56] Loble reviewed more than 1,700 water rights claims a year during his tenure as Chief Water Judge, and reviewed and approved nine compacts between the State of Montana and various Native American tribes.[6] Nevertheless, more than 15,000 water rights claims remained unreviewed by the Water Court.[7] Upon his retirement, Loble famously noted "water is a flammable substance" in Montana.[6]

To keep the Water Court on good legal ground, the Montana Legislature (State Capitol depicted) codified into law the Water Court's water rights re-examination rules in 2015.

McElyea was appointed Chief Water Judge in May 2013 effective upon Loble's retirement.[57] Douglas Ritter was appointed Associate Water Judge on September 13, 2013, to fill McElyea's unexpired term.[56][lower-alpha 12]

In early 2015, the DNRC finished verifying and examining the more than 219,000 water rights claims in Montana. Chief Water Judge McElyea asked the state legislature for assistance in the Water Court's review of the 90,000 early decisions. To help ensure that the Water Court was on firm legal ground for this review, McElyea asked the legislature to adopt the Water Court's reexamination benchmarks into law. The legislature did so, and increased funding for Water Court as well.[55]

In 2017, the Montana Legislature began consideration of a bill which would alter the MWUA. Under current law, anyone who objects to a DNRC decision regarding new water rights (those filed after 1982) must seek redress in a Montana District Court. But District Court judges expressed concern over this provision, because they lacked experience with water rights. The proposed bill would change the venue for this lawsuit to the Water Court. Only four or five cases a year were expected to come before the court.[58]

The 1979 MWUA amendments contained no provision for terminating the Water Court once it accomplished its task of adjudicating all water rights. Theoretically, the Water Court could run out of work once its task was completed. However, in 1985 the Montana Legislature enacted a bill which gave the Water Court jurisdiction over water allocation decisions by the DNRC.[38] Several studies project that all final adjudications would have been reviewed by the Montana Supreme Court by 2028. This would leave the Water Court with little work.[47]