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Broadwater County judge rules against developers in 'landmark' water ruling

A plaintiff described the ruling as a victory for Montanans confronted by rampant sprawl and the exploitation of water.

A Broadwater County judge ruled last week in favor of a small coalition of landowners and water rights holders who challenged a subdivision proposed for an area already grappling with water supply and quality issues.

In a sprawling, 85-page order, Broadwater County District Court Judge Michael McMahon chastised the Broadwater County Commission for authorizing preliminary plat approval of the Horse Creek Hills subdivision near Canyon Ferry, despite an “abjectly deficient” environmental assessment that failed to take into account impacts to water quantity, water quality, public safety and wildlife.

McMahon offered similarly sharp language for another defendant, the Department of Natural Resources, accusing the state agency of demonstrating “hostility” toward a 2009 Montana Supreme Court decision that narrowed a 51-year-old loophole that allows a landowner to develop groundwater without demonstrating there will be no adverse impacts to those who hold existing water rights. Developers have been using that loophole with increasing frequency to facilitate low-density development in areas of Montana lacking unallocated surface water rights.

McMahon wrote in the order that by issuing four letters to the project developers preemptively authorizing four exempt wells instead of a single one, DNRC had relied on departmental guidance that was “wrong” and contrary to the state’s highest court’s 2009 ruling in the case Clark Fork Coalition v. Tubbs. He accused the agency of “torturously misreading its own rules.”

“DNRC blatantly ignores a recent Supreme Court holding, which the letter demonstrates that DNRC understands, to conclude that each of the four phases of one larger project are entitled to exempt wells. This is contrary to the administrative rule, statute, the rulings of this and the Montana Supreme Court, and perhaps most troubling, DNRC’s own restatement of law in the letters [to the project developer],” McMahon wrote. “It should give DNRC pause that citizens with seemingly no legal training appear to have a better grasp of the exempt well limits than DNRC, the agency charged with administering the Water Use Act.”

A spokesperson for the DNRC told Montana Free Press Thursday that the agency is still reviewing the ruling and won’t advise its employees of revised guidance until it’s had an opportunity to further study it.

Broadwater County Attorney Cory Swanson said in an email to MTFP that the county is reviewing Judge McMahon’s ruling and “considering our appropriate next steps.”

An attorney for 71 Ranch, the owner of the Horse Creek Hills property, underscored in an email to MTFP that both the DNRC and Broadwater County deemed the application sufficient. Both organizations “represented in court that the permit application and approvals followed the letter of the law,” according to Vuko Voyich. Voyich did not indicate if 71 Ranch planned to appeal the order.

If Horse Creek Hills is eventually developed as imagined, it would include 41 lots, 39 residential and two commercial, spread across a 442-acre parcel of land near where Confederate Creek runs into Canyon Ferry.

In a written statement following the ruling Thursday, Vicki Sullivan, one of the Broadwater County residents opposed to the project, accused the county of engaging in a “deeply flawed subdivision approval process” and condemned DNRC for its “dogmatic rubber-stamping of multiple exempt wells.”

“The court order is not only a victory for rural residents on the eastern shore of Canyon Ferry, but it is also a victory for citizens across the state confronted by rampant sprawl development proposals exploiting our water resources,” Sullivan said. “Montana citizens now have a clear roadmap for holding their local decision-makers and state agencies accountable [by ensuring] they consider public and community comments, proactively identify negative impacts related to new sprawl development, and deny subdivisions that do not have adequate water supplies.”

Upper Missouri Waterkeeper Executive Director Guy Alsentzer, an attorney who represented the plaintiffs in the lawsuit, described McMahon’s decision as a “landmark ruling” that unequivocally establishes local governments’ duty to take citizen concerns into account when considering new subdivisions.

“You can’t use exempt wells to circumvent sound, science-based planning,” Alsentzer told MTFP, adding that Judge McMahon was “rightfully frustrated.”

“You shouldn’t have to go to court. The county should be doing its job, DNRC should be doing its job and [the Montana Department of Environmental Quality] should be doing its job,” he said. “Without everyone playing their role, we get gaps.”

A hearing on the case on Feb. 9 drew considerable interest, with about 40 people crowding into the Broadwater County Courthouse to hear an hour of oral arguments. During the hearing, attorneys for the county and 71 Ranch argued that everything required under the Montana Subdivision and Platting Act had been furnished to and evaluated by the county. The DNRC’s attorney argued that any finding against the agency would be premature since it had not — and could not — issue the exempt well certificates at this stage in the development. DNRC attorney Molly Kelly also argued that DNRC would have treated the application differently had it been presented as a subdivision planned for a single stage.

When the Montana Legislature convenes in Helena every other year, exempt wells are frequently targeted for changes.

In 2023, Rep. Casey Knudsen, R-Malta, introduced a bill seeking to widen the exempt well loophole. Like other proposals before it, it hit a headwind of opposition from agricultural producers concerned about impacts on senior water rights holders and conservationists anxious about unchecked groundwater development wreaking havoc on aquatic ecosystems. Since then, a DNRC-convened stakeholder group has met regularly to explore issues related to water rights and groundwater development and to develop proposals to put before state lawmakers ahead of the 2025 legislative session.

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