Three years ago, a Bozeman-based engineering firm sent four nearly identical letters to the Department of Natural Resources and Conservation sketching out loose plans for a 41-lot subdivision proposed for a rural, predominantly agricultural landscape along the eastern shore of Canyon Ferry.
The four letters, all sent on the same day, correspond with the four phases of a subdivision proposed by one of Montana’s most politically well-connected families and largest landowners, the Galts. As explained in the letters, the 435-acre Horse Creek Hills subdivision would use exempt wells — so-named because they’re exempt from DNRC permits designed to ensure new wells won’t adversely impact other water users — to supply water to the project’s 39 homes and two businesses.
The enclosed layout displays four projects at present, but this letter specifically pertains to project #1 out of the total of four projects. The first letter states that each planned project or phase will not exceed 10-acre feet of water usage, in accordance with the existing DNRC [exempt-well] regulations.
That letter, and the three that followed, closed with a request that the DNRC “provide concurrence” that Horse Creek Hills’ water plan “is in agreement with the DNRC standards for this region.”
One week later, a DNRC employee based in Helena responded affirmatively, stating that the project, as explained, conformed to the existing regulations and laws regarding the submission of a water right exemption.
DNRC issued that preliminary green light largely because Horse Creek Hills is a phased development. Had it been proposed as a single residential project, it probably would have been limited to just one exempt well — not enough water to serve 39 homes and two businesses. The initial “all clear” in hand, the developer, 71 Ranch, proceeded with the Horse Creek Hills subdivision application.
“We believe that we are devoting excessive time to a trivial water usage issue, and we would appreciate the simplification and optimization of this process, allowing us to efficiently construct houses and make homes affordable for people.”
Cory Shaw, Montana Building Industry Association executive director
In the three years since that correspondence, the subdivision has garnered intense pushback, largely due to concerns that it will deplete and degrade the rivers, streams and groundwater of the Upper Missouri basin. Opponents of the proposal say it could threaten agricultural operations, dewater a tributary of the Missouri that serves as rainbow trout spawning ground, and add further nutrient pollution to Canyon Ferry, which already suffers from toxic algal blooms.
But the application advanced. After bouncing back and forth between the Broadwater County Planning Board, the Broadwater County Commission and the DNRC, the preliminary plat application for Horse Creek Hills was approved by the county commission last July.
In August, environmental nonprofit Upper Missouri Waterkeeper and five adjacent and nearby landowners sued the DNRC and Broadwater County Commission over that decision, arguing that despite an “unprecedented” volume of opposition, county and state regulators have failed to adequately examine the subdivision’s impacts to water supply, water quality, wildlife and public health and safety.
Welcome to the messy, contentious and uncertain world of exempt wells, a tool developers are using with increasing frequency to secure water in basins where all available surface water rights are already spoken for.
Broadly speaking, developers like the loophole, senior water rights holders disdain it, and regulators approach it with trepidation given conflicting interpretations of how it comports with the 50-year-old Montana Water Use Act, which grants water supply seniority to those with the oldest water rights.
According to Guy Alsentzer, the Executive Director of Upper Missouri Waterkeeper, the increasing trend of exempt-wells can be seen as a detrimental competition that will negatively impact both the quantity and quality of water resources.
He stated that the expense will be borne by our rivers, streams, and the people who already rely on the water’s flow and availability.
Exempt wells are also the source of one of the biggest water fights before state lawmakers, who are walking a perilous regulatory tightrope. Legislators are making a concerted effort to increase housing supply in one of the nation’s fastest-growing states by reforming and streamlining permitting processes without running afoul of a constitutional directive to guard against “unreasonable depletion and degradation of natural resources” or by inspiring a knock-down, drag-out fight with agricultural producers.
So far, if a heated hearing on House Bill 642 seeking to change exempt-well permitting is any indication, that tightrope act doesn’t appear to be going well. About 40 people lined up before the House Natural Resources Committee on Feb. 22 to offer testimony on HB 642, which is sponsored by Casey Knudsen, a Republican rancher and real estate agent from Malta.
Knudsen’s proposed legislation aims to eliminate the concept of “combined appropriation,” which currently imposes restrictions to safeguard the rights of existing water rights holders. Additionally, the bill allows larger groundwater allocations for subdivisions exceeding 20 acres and mandates the installation of meters on certain wells or developed springs. This move would assist the DNRC in monitoring and keeping track of water withdrawals.
Jocelyn Galt Cahill, a supporter of HB 642, referred to the Horse Creek Hills subdivision while urging committee members to pass the bill in order to “bring clarity to the law and prevent unwarranted lawsuits.” Despite reaching out for comments from Errol Galt, the owner of 71 Ranch, as well as the engineering firm and lawyers involved in the Horse Creek Hills development, none of them responded, according to Montana Free Press.
Other proponents, including representatives of the Montana Realtors Association and the Montana Water Well Drillers’ Association, said HB 642 would alleviate the state’s housing crunch and allow lawmakers, rather than judges, to steer the discussion.
According to Cory Shaw from the Montana Building Industry Association, research indicates that the water usage from domestic wells is minimal when compared to the water consumption by the agriculture industry and evaporation losses.
“In my more than 30 years of working on policy, I have never come across a bill that is as strongly opposed to agriculture, private property rights, and the prior appropriation doctrine as this one.”
Rancher and property rights attorney Hertha Lund
Shaw expressed his concern about the excessive amount of time being devoted to a minor water usage issue. He emphasized the need for an improved and efficient process to expedite the construction of houses and make housing more affordable for people.
Critics, such as agricultural producers, environmental groups, and multiple municipalities, argue that SB 642 will significantly broaden the current exemption. This would potentially enable developers and numerous existing exempt-well owners to wrongfully appropriate water from senior water rights holders. In such a scenario, these holders will have limited or no means of redress if vital water sources like irrigation ditches, domestic wells, municipal water supplies, or aquatic ecosystems run dry.
“The bill I’ve witnessed after three decades of working on policies is the utmost opposition to agriculture, private property rights, and the prior appropriation doctrine,” expressed Hertha Lund, a rancher and attorney specializing in property rights, during the committee hearing. “By aligning with California’s approach, this bill prioritizes money and development above all other considerations.”
Travis Stuber, a farmer specializing in seed potatoes, expresses concern about the uncertain future of his family farm in Gallatin County. He fears that his son may face difficulties in continuing the farming legacy if the water rights, which were originally obtained by his wife’s great grandfather, come under threat.
Stuber expressed concerns over the bill, stating that it poses a significant loophole that could greatly impact both his son’s and their farm’s future. He earnestly implored the audience to vote against the bill.
Andrew Gorder, the legal director of the environmental nonprofit Clark Fork Coalition and a former Montana Water Court water master, expressed his opinion to the committee, stating that the bill is filled with numerous flaws, making it difficult to identify a starting point for discussion.
In a follow-up conversation with MTFP, Gorder said he’s not alone in his struggle to understand how HB 642 would be applied. He said he’s discussed the bill with other experienced water law attorneys and couldn’t reach a consensus on exactly how it would work in practice. “But there was consensus,” Gorder said, “that it’s not good.”
We cannot continue to delay this for another two years, as we have been doing for the past decade. Instead of constantly criticizing every solution that has been proposed, it is time for us to unite and actively work towards finding a solution.
House Bill 642 sponsor Casey Knudsen
According to him, it is evident that this bill is primarily influenced by the development industry as it not only permits more use of groundwater for current subdivisions but also encourages the expansion of urbanization into rural areas and agricultural lands, disregarding open spaces.
DNRC could potentially have to reassess approximately 28,000 exempt-well certificates that have been processed since 2014 due to the retroactive element of HB 642. This bill grants those who have drilled wells in the past ten years the right to access additional water. Thus, alongside the overhaul of its current well process, DNRC may also have to address these certificates.
Knudsen concluded his remarks by highlighting certain issues and advocating for putting an end to the perpetual cycle of litigation and interpretation.
He stated that it is time to cease postponing this matter for another two years, as we have been doing for the past ten years. He emphasized the need for us to unite and collaborate towards finding a solution, rather than constantly criticizing any proposed solution.
That argument appeared to resonate with Republican members of the House Natural Resources Committee. On Feb. 24, all of the committee’s GOPs, save for Rep. Kenneth Walsh, R-Twin Bridges, voted to approve an amendment that effectively gives House lawmakers another month to debate the measure before running up against a transmittal deadline by adding a fiscal element, a $150 filing fee to accompany exempt-well notices of completion. (The current exempt well filing fee is $125.)
Since that vote, no additional committee action has been taken on HB 642, which has more than 60 GOP co-sponsors, and there are no additional amendments available for review. The current transmittal deadline for bills with a fiscal element is April 3.
According to Alsentzer from Upper Missouri Waterkeeper, the preliminary plat approval for the Horse Creek Hills subdivision will continue to be effective as the lawsuit progresses.
