A lawsuit is attempting to overturn a new law that halts the state of Montana’s practice of acquiring partial water rights from lessees who divert water from private land onto state land.
Advocates for School Trust Lands, a Utah-based advocacy group that includes members in Montana, brought the lawsuit in Lewis and Clark County District Court on Sept. 6 against the state of Montana. The organization describes itself as a nonprofit that “helps states honor their historic commitment to optimize revenues from school trust lands and manage their permanent funds as an ever-growing, sustainable source of education funding.”
The suit also lists two minor Helena school students as plaintiffs. Their inclusion is typical for civil litigation to name individuals who will be “harmed” without court action.
Under oversight of the State Land Board, the Montana Department of Natural Resources and Conservation manages nearly 5 million acres of state school trust lands under a mandate that the lands produce revenue for K-12 and other public schools. To produce revenue, the lands are leased for grazing, farming and mineral development.
Rep. Alan Redfield, R-Livingston, brought House Bill 286 earlier this year after reports of letters sent from DNRC to some lessees of state lands who had diverted water from private lands onto state lands for irrigation or stock water. The letters note that DNRC acquires an interest in the private water right when it is used on state land.
Department of State Lands v. Pettibone, a 1985 Montana Supreme Court Decision, vests those partial water rights with the state, DNRC contended. The court ruled in that case that a water right diverted or developed on state school trust lands is a state water right and those interests cannot be eliminated without adequate compensation to the trust.
In applying Pettibone to its lease agreements, DNRC has claimed partial water rights in more than 170 contracts in which the point of water diversion is on private lands, according to the lawsuit. Typically the water is piped to a stock tank or for irrigation on the state land.
“DNRC has periodically instructed trust land lessees to comply with Pettibone by assigning appropriate preexisting water rights developed on trust land to the state, and has taken steps to enforce those assignments,” the lawsuit says.
HB 286 undoes that practice, ordering DNRC to rescind its interests in water rights diverted from private to state lands as well as prohibiting future state claims. Supporters of the bill point to a 2000 case before the Montana Water Court in which the judge found the state could not claim a water right for water only used occasionally on state lands.
Water rights attorney Colleen Coyle testified to the Legislature in February that she initially believed the state claims were the result of a misunderstanding and that similar cases were previously cleared up with a meeting to show the point of diversion on private land. But that has changed recently as the state has sought to enforce its ownership interests, she said.
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“It penalizes the water user for doing something that has been going on for a long time,” Coyle told lawmakers. “It creates no adverse effects or problems and creates a benefit,” by enhancing the value of the lands to graze or farm, thus increasing payment to the trust.
Officials with DNRC testified that HB 286 ran counter to the Pettibone decision and that established water law places the rights at the point of use rather than the point of diversion. Under their constitutional trust duties, DNRC is required to produce revenue and the value of the water rights are removed without due process, they said.
Brian Bramblett, the agency’s deputy chief legal counsel, told lawmakers the practice of claiming partial water rights has been in place for nearly two decades and that more recent letters were attempts to enforce rights that have “fallen through the cracks.” He further testified that if the situation were reversed, and a state water right was diverted onto private land for use, the private landowner could also claim an interest in the water right.
As a policy, DNRC has not objected to a lessee removing water infrastructure if the lease changes hands and typically a new lessee will drill a new well to supply water, Shawn Thomas, DNRC Trust Lands Division administrator, told legislators.
Several lawmakers took a dim view of the state’s argument. In scathing comments, Rep. Bob Brown, R-Thompson Falls, called the practice as “ugly as anything I’ve seen,” Rep. Mark Noland, R-Big Fork, said the state employed “thug tactics,” before later apologizing for the comment. Rep. Brad Hamlett, D-Cascade, said the policy “defies gravity.”
Opposition to the bill centered mainly on the state’s duty to the trust under the Montana Constitution and the manner of stripping the water rights without compensation or process.
HB 286 saw significant bipartisan support, passing on a final Senate vote of 42-7 and House vote of 90-9. Gov. Steve Bullock, a Democrat, did not sign or veto the bill, which allowed it to become law.
The lawsuit asks the court to temporarily delay implementation of HB 286, specifically a Sept. 30 deadline for DNRC to rescind its pre-existing water rights. The lawsuit then asks that the law be struck down as unconstitutional, Roy Andes, attorney for the plaintiffs, said.
“HB286 on its face violates the state’s management prerogatives concerning trust land by eliminating the state’s capacity to consent and negotiate the terms of its leases with respect to water rights,” the lawsuit says. “This also violates the state’s constitutional trust duties of prudence, productivity and fidelity.”
HB 286 creates a separate water rights standard for the state that is less favorable than those for private individuals. The forced divestment of valuable water rights diminishes the value of state lands and thus the potential revenues they produce, according to the lawsuit.
Redfield said in an interview that he had expected a lawsuit given comments made by state officials during the session. The lawsuit includes similar arguments made by opponents to HB 286, but he remains convinced that the Pettibone decision was misapplied and that the state has no legal claim to those water rights. He was pleased by the bipartisan support the bill garnered.
Messages left with Advocates for School Trust Lands were not returned in time for this story.
Reporter Tom Kuglin can be reached at 447-4076 @IR_TomKuglin