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Montana Supreme Court sides with state in water right dispute

Schutter decision has implications for other water rights used on state trust land.

The Montana Supreme Court has sided with the state's Department of Natural Resources and Conservation in a dispute involving a 64-year-old water right that's used to irrigate both private and public land.

In a unanimous opinion authored by Justice Beth Baker, the court ruled that the state retains an ownership interest in a water right first claimed in 1960 by John Schutter of Gallatin County. The water right is somewhat unique in that it's supported by a well that was drilled on private land, but used to irrigate both private and public land. Debra and Sidney Schutter use that well to grow potatoes and other crops on three, square-mile sections of land they own, as well as a square-mile section of state trust land that's managed by the Department of Natural Resources and Conservation.

The dispute that inspired the lawsuit began in 2019 when the Montana Land Board - composed of the state's top five elected officials - claimed ownership of the portion of the water right used to irrigate the state land. The Schutters objected to the state's ownership claim and brought the matter before the Montana Water Court, which ruled in favor of the state.

In their ruling on April 30 upholding the Montana Water Court's decision, the justices argued that the state must exercise some ownership over the water right to act in accordance with its directive to "secure the largest measure of legitimate advantage" for state trust land beneficiaries - Montana's public schools.

The justices found that the use of the Schutters' well water on state trust land plays a key role in the dispute because it demonstrates that the water is being put to "beneficial use" - one of the conditions that must be met before the state will authorize a water right. Had the state land been excluded from the water rights application, "the Schutters' claim to a water right would have been different, perhaps smaller," the justices wrote.

The justices further concluded that the water rights are intertwined with the state's property rights because much of the state exists in a semi-arid zone where "control of water means control of the land itself." To ensure that the state is maximizing its trust lands' potential, it's important that the state also exercise some control over the water rights used to irrigate state trust land, the justices suggested.

Carl Devries, who sits on the board of the Senior Ag Water Rights Alliance, described the state's position as a "government bureaucracy gone insane" in a recent op-ed in the Billings Gazette about the lawsuit.

"This ruling significantly undermines private property rights and will have long-lasting and negative effects," DeVries wrote in an email to Montana Free Press. "As a result of the Supreme Court's decision, water rights holders are now faced with a tough choice: protect their valuable water rights or fully use their state-leased land."

DeVries said the holders of water rights might now be inclined not to use their water rights on state-owned land out of fear that the state will claim partial ownership over the right. That, he wrote, would be a loss for both the lease-holder - who could be limited to a less-productive use of the land - and Montana's public schools. Since land with water access is generally more productive, a lessee's decision not to apply their water right to state trust land could result in a decline in revenues for school system coffers.

DeVries called for the Land Board to exercise greater oversight over the Department of Natural Resources and Conservation "so it can no longer make these unilateral decisions." More specifically, he urged the Land Board to take up the matter when they meet on May 20. The DNRC did not respond to MTFP's request for comment.

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