HomeMy WebLinkAboutBozeman v Utility Solutions Bozeman Reply
IN THE SUPREME COURT OF THE STATE OF MONTANA Cause No.: DA 19-0680
CITY OF BOZEMAN,
Petitioner / Appellant,
v.
MONTANA DEPARTMENT OF NATURAL
RESOURCES AND CONSERVATION, an
agency of the State of Montana, and UTILITY
SOLUTIONS, LLC,
Respondents / Appellees
PETITIONER / APPELLANT CITY OF BOZEMAN'S REPLY BRIEF
On Appeal from the Montana Eighteenth Judicial District Court, Gallatin County
Cause No. DV-18-1323B
Hon. Rienne H. McElyea, District Court Judge Presiding
Matthew W. Williams
WILLIAMS & JENT, PLLP
506 East Babcock
Bozeman, MT 59715
Telephone: (406) 586-1373
Facsimile: (406) 586-4548
Email: Mattheww53@aol.com
Attorney for Utility Solutions, LLC
Peter G. Scott
Peter G. Scott, Law Offices, PLLC
682 South Ferguson Ave, Suite 4
Bozeman, MT 59718-6491
Telephone: (406) 585-3295
Facsimile: (406) 585-3321
Email: peter@scott-law.com
office@scott-law.com
Attorneys for Petitioner / Appellant
City of Bozeman
Barbara Chillcott
Cameron S. Boster
Special Assistant Attorneys General
Montana Department of
Natural Resources and Conservation
Post Office Box 201601
Helena, MT 59601
Telephone: (406) 444-5258
Email: Barbara.Chillcott@mt.gov
Cameron.Boster@mt.gov
Attorneys for Montana Department of
Of Natural Resources and Conservation
i
TABLE OF CONTENTS
TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
i
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
I. FACTS SUPPORTING ARGUMENT IN REPLY . . . . . . . . . . . . . . . . . 1
II. ARGUMENT IN REPLY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
A. Introduction and Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
B. The City's Planned Use of Water for Municipal Purposes in the
Disputed Area is Protected from Adverse Effect Under § 85-2-
402(2)(d), MCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1. The Plain Language of § 85-2-402(2)(a), MCA, Protects
the City's Planned Use of Water From Being Adversely
Affected by Utility Solutions' Change Application . . . . . . . .5
2. The Growing Communities Doctrine Provides any
Needed Context and Structure for Interpreting
Statutory Protection of Planned Use of Water to Meet
Future Municipal Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3. Interference with the City's Possessory Interest in the
Place of Use Adversely Affects the City's Planned Use
Of Water . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
4. Objectors Have Standing When a Water Right
Application Adversely Affects a Broad Range of
Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5. DNRC Finding that Change Application Fills in
ii
Service Area Gap is Clearly Erroneous and
Prejudicial to City's Significant Interest . . . . . . . . . . . . . . 19
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
CERTIFICATE OF COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
iii
TABLE OF AUTHORITIES
Cases Page
City of Billings v. Pub. Serv. Comm'n of Montana,
193 Mont. 358, 368-69, 631 P.2d 1295, 1302 (1981) . . . . . . . . . . . . . . . . 20
City of Helena v. Cmty. Of Rimini,
388 Mont. 1, 14, 397 P.3d 1, 11 (2017) . . . . . . . . . . . . . . . . . . . . . . . . . . Passim
Fabian v. Collins,
3 Mont. 215, 224 (1878) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Heffernan v. Missoula City Council,
360 Mont. 207, 220-21, 255 P.3d 80-91 (2011) . . . . . . . . . . . . . . . . . . . . . . 18
In re Archer,
332 Mont. 1, 5, 136 P.3d 563, 565 (2006) . . . . . . . . . . . . . . . . . . . . . . 6, 9, 15
Lake Shore Duck Club v. Lake View Duck Club,
50 Utah 76, P. 309 (1917) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Missoula Pub. Serv. Co. v. Bitter Root Irr. Dist.,
80 Mont. 64, 257 P. 1038, 1040 (1927) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Montana Power Co. v. Cremer,
182 Mont. 277, 280-81, 596 P.2d 483, 485 (1979) . . . . . . . . . . . . . . . . . . . . 7
Montana Trout Unlimited v. Beaverhead Water Co.,
361 Mont. 77, 81, 255 P.3ed 179, 181 (2011) . . . . . . . . . . . . . . . . . . . . . . . 18
Sherlock v. Greaves,
106 Mont. 206, 76 P.2d 87, 93 (1983) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
United States Dep't of Army Corps of Engineers,
396 Mont. 433, 436, 455 P.3d 828, 830 (2019) . . . . . . . . . . . . . . . . . . . Passim
iv
Western Energy Co. v. State, Dept. of Revenue,
1999 MT 289, ¶ 11, 297 Mont. 55, ¶ 11, 990 P.2d 767, ¶ 11 . . . . . . . . . . . . 6
Statutes and Session Law
Mont. Code Ann. § 1-2-101 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Mont. Code Ann. § 2-4-704 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Mont. Code Ann § 75-6-102 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13, 15
Mont. Code Ann. § 76-1-601 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 13, 14
Mont. Code Ann. § 76-1-605(2)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Mont. Code Ann. § 85-1-103 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 19
Mont. Code Ann. § 85-2-102(5)(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Mont. Code Ann § 85-2-227(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14, 15
Mont. Code Ann § 85-2-227(4)(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Mont. Code Ann. § 85-2-308(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17, 18, 19
Mont. Code Ann. § 85-2-311 (1)(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 13, 16
Mont. Code Ann § 85-2-316 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Mont. Code Ann § 85-2-343 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Mont. Code Ann. § 85-2-402(2)(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Passim
Mont. Code Ann. § 85-2-402(2)(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Passim
Mont. Code Ann § 85-2-402(2)(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Mont. Code Ann § 85-2-402(2)(g) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11, 12
Section 7095, Rev. Codes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
v
Rules
Mont. Admin. R. 36.12.101(24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Other State Statutes
Idaho Code, Section 42-202B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Revised Code of Washington 90.03.383(2)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Secondary Authority
Guidance For Municipal Purposes & Water Rights
Montana Department of Natural Resources and Conservation . . . . . . . . . . . 13
Permitting A Natural Flow in A Prior Appropriation System: Dekay v. United
States Fish and Wildlife Service
1 Great Plains Nat. Resources J. 97, 113 (1996) . . . . . . . . . . . . . . . . . . . . . . 12
CITY OF BOZEMAN'S REPLY BRIEF | 1
I. FACTS SUPPORTING ARGUMENT IN REPLY
1. Finding of Fact No. 18 made in support the Order granting Reservation No.
70118-41H, states in part:
The additional water from the Hyalite Reservoir expansion, expected
to be completed by the fall of 1992, will be entirely allocated to the
City of Bozeman, which desires to purchase all of this water. (Bd. Exh.
4-C/ p. 9; DFWP Exh. 101, Wysocki cover letter.) The pending Hyalite
Reservoir expansion water contract is expected to provide nearly all
of the future water needs of the City of Bozeman through the year
2020. (Bd. Exh. 4-C, p. 23; DFWP Exh. 101, p. 125.).
AR 276, Affidavit of Brian Heaston (Heaston Aff) - Ex. 10 (emphasis
supplied).
2. Provisional Permit 41H 58294 00 was issued to DNRC when Hyalite Reservoir
was expanded. AR 258 - Heaston Aff. Ex. 7 (“THIS PERMIT INCREASES
THE VOLUME OF HYALITE RESERVOIR FROM 7,850 AC-FT TO 10,184
AC-FT BY INCREASING THE DAM HEIGHT.”).
3. The City contracted with DNRC for delivery of 5,712 acre-feet or 56.09% of the
10,184 acre-feet of water stored in Hyalite Reservoir (as expanded). AR 247 -
Heaston Aff., Ex 6.
4. Provisional Permit 41H 58294 00 was issued for the City’s planned use to meet
future demand. AR 231 - Heaston Aff. ¶ 12.
5. The City’s plan to use water under Provisional Permit 41H 58294 00 (and other
water rights) for municipal service in the Disputed Area will be adversely
affected by Change No. 41H 30110660. AR 232 - Heaston Aff. ¶ 12.
II. ARGUMENT IN REPLY
A. Introduction and Summary
The Department of Natural Resources and Conservation (“DNRC”), Utility
Solutions, and the district court conclude that the City’s interpretation of § 85-2-
CITY OF BOZEMAN'S REPLY BRIEF | 2
402(2)(a), MCA is wrong because the common law doctrine of prior appropriation
only protected another appropriator’s ability to divert water from a shared source.
Neither the Appellees’ counter arguments, nor the district court’s ruling,
adhere to this Court’s direction to begin statutory construction begins with plain
language. Their interpretation ignores plain language in favor of context based on
provisions selected to support the position that the of the Water Use Act (“WUA”)
merely codifies common law prior appropriation.
DNRC wrongly contends “[i]n the State of Montana, no type of water use or
user is given preferential treatment.” DNRC Answer at 34. DNRC also wrongly
contends that water law in Montana is untethered to the planning laws. DNRC
Answer at 34. Utility Solutions argues that that the City’s Growth Policy and Water
Facility Plan afford no protection for the planned use of water outside of a City’s
incorporated limits, which seems to defeat the purpose of planning.
Appellees’ position might have merit if this case was decided under 19th
century common law. But, the WUA also codifies the Growing Communities (or
Cities) Doctrine. See City of Helena v. Cmty. of Rimini, 388 Mont. 1, 14, 397 P.3d
1, 11 (2017); see also United States Dep't of Army Corps of Engineers, 396 Mont.
433, 436, 445 P.3d 828, 830 (2019) (“USACOE”). In both cases, this Court
recognized that municipal water rights are treated differently under the Growing
CITY OF BOZEMAN'S REPLY BRIEF | 3
Communities Doctrine, and that statutory protections for municipal water use are
tethered to municipal planning.
Two things are required to implement the Growing Communities Doctrine.
First, a reasonable amount of water must be reserved for future use. Second, there
must be a place to use that water. The intersection of those requirements is the
tether between water law and planning that DNRC wrongly argues is lacking. The
first requirement, which is not at issue in this case, is addressed directly in City of
Helena and USACOE, supra. In this case of first impression the Court is asked to
address the second requirement.
At issue is the scope of protection for the City’s planned use of water from
adverse effect caused by Utility Solutions’ change Application. The WUA requires
water right users to hold the possessory interest in the planned place of use. See §
85-2-311(1)(e), MCA; § 85-2-402(2)(d), MCA. Municipal water rights are
different because, unlike other appropriators, municipalities do not own the place of
use. In recognition of that difference, and contrary to the position taken by DNRC
in this case, that is why municipal water rights are treated differently. Specifically,
DNRC’s Guidance for Municipal Purposes & Water Rights states “[w]hen
reviewing water right applications the Department is able to look at a properly
adopted growth policy under § 76-1-601, MCA for purposes of possessory interest
in the Place of Use.” AR 286.
CITY OF BOZEMAN'S REPLY BRIEF | 4
Under DNRC’s guidance, the City’s Growth Policy and Water Facility Plan
satisfy the possessory interest requirement for municipal use. The City holds a legal
right to deliver water in the Disputed Area under rights issued to meet the City’s
future needs. Utility Solutions application adversely affects the City’s planned use
of water by interfering with the City’s adopted plan to provide municipal service in
the Disputed Area. DNRC’s Final Order was issued in violation of § 85-2-
402(2)(d), MCA. This Court is asked to order that Utility Solutions’ application be
denied or, alternatively, modified to exclude the Disputed Area from Utility
Solutions’ approved place of use.
B. The Planned Use of Water for Municipal Purposes is Protected from
Adverse Effect under § 85-2-402(2)(d), MCA.
Utility Solutions was required show by a preponderance of evidence that a
proposed change in its appropriation right,
will not adversely affect the use of the existing water rights of other
persons or other perfected or planned uses or developments for which a
permit or certificate has been issued or for which a state water
reservation has been issued under part 3.
§ 85-2-402(2)(a), MCA (emphasis added).
Utility Solutions made no showing that its application would not adversely
affect the City’s planned use of water. On review, the Court must determine
whether the City’s Growth Policy and Water Facility Plan constitute a “planned
CITY OF BOZEMAN'S REPLY BRIEF | 5
use?” Next, whether the City’s right to use water under a provisional permit issued
for the purpose of meeting the City’s future needs satisfies the requirement that a
water right be “issued” for the City’s planned use? And finally, whether
interference with the City’s plan to deliver municipal water in the Disputed Area
constitutes an “adverse effect?”
1. The Plain Language of § 85-2-402(2)(a), MCA Protects the City’s
Planned Use of Water from Being Adversely Affected.
The City adopted a Growth Policy and Water Facility Plan for delivering
municipal water in the Disputed Area. Heaston Aff., ¶¶ 6 and 7. Neither DNRC’s
Final Order nor the district court’s decision address the meaning of “planned use.”
DNRC simply states the City’s plan to use water is not a “planned use” of water
within the meaning of § 85-2-402(2)(a), MCA. DNRC Answer at 19 (“City’s plan
for delivering water in the Disputed Area one day is not one of those [protected]
interests”). Utility Solutions says protection of a “planned use” means only that
water will be available when the holder of an inchoate right (permit or reservation)
is ready to put water to beneficial use. US Answer at 15.
Appellees’ arguments are not based on plain language of the statute. They
are based on authority that predates adoption of the WUA and context from selected
provisions of the Act. When interpreting statutes,
CITY OF BOZEMAN'S REPLY BRIEF | 6
Legislative intent is ascertained, in the first instance, from the plain
meaning of the words used. If the intent of the legislature can be
determined from the plain meaning of the words used, the plain
meaning controls and the court need go no further nor apply any other
means of interpretation.
In re Archer, 332 Mont. 1, 5, 136 P.3d 563, 565 (2006) (emphasis supplied) citing
Western Energy Co. v. State, Dept. of Revenue, 1999 MT 289, ¶ 11, 297 Mont. 55,
¶ 11, 990 P.2d 767, ¶ 11.
It can be confessed, without violence to the City’s position, that Utility
Solution’s argument is consistent with common law tenants of prior appropriation.
However, times have changed. The WUA encompasses more than 19th century
common law. Nothing in the plain language of § 85-2-402(2)(a), MCA, limits
protection of planned uses from adverse effect to inchoate rights. Based on plain
language this Court should determine that formal adoption of a Growth Policy and
Water Facility Plan constitute a “planned use” of water.
Utility Solutions argument that public planning outside of City’s limits has no
regulatory force is addressed below. For the purpose of interpreting § 85-2-
402(2)(a), MCA, cities necessarily “plan” for growth outside of existing limits.
Utility Solutions’ too narrow interpretation of § 85-2-402(2)(a), MCA, ignores the
whole point of planning and strips cities of express statutory protections.
Appellees dispute whether water rights were “issued” for the City’s planned
use. The district court did not address the question. The Appellees’ argument
CITY OF BOZEMAN'S REPLY BRIEF | 7
seems to turn on the fact that the City’s planned use is based on rights not issued in
the City’s name. Utility Solutions also contends that rights issued before the growth
policy was adopted could not be issued for the City’s planned use. The record
shows that the City planned for growth in the Disputed Area and that water held by
the City to meet future needs, including Provisional Permit 41H 58294 00, were
issued to meet that demand. See Facts 1-5 above.
Appellees’ argument fails for at least two reasons. First, it requires words to
be added to the statute (i.e., “issued in the objectors name at the time of plan
adoption”). § 1-2-101, MCA. Second, it runs afoul of the legislative mandate to
interpret the WUA liberally. § 85-1-103, MCA. Appellees’ narrow interpretation
of “issued” would preclude protection to any appropriator that acquires a water right
and changes the purpose of use. Bozeman is in a basin closed to new
appropriations. § 85-2-343, MCA. Appellees too narrow interpretation means the
City could not protect a planned use of water under acquired rights (even from
depletion of the source) because the rights were not “issued” to the City for its
“planned use.” Appellees’ interpretation of “issued” is not only impermissibly
narrow, it is absurd. Montana Power Co. v. Cremer, 182 Mont. 277, 280–81, 596
P.2d 483, 485 (1979).
The City holds various rights for future need. AR 233 - Heaston Aff. ¶ 12.
DNRC expanded storage in Hyalite Reservoir for the City’s future needs. AR 276
CITY OF BOZEMAN'S REPLY BRIEF | 8
- Heaston Aff., Ex. 10, FOF 18. Provisional Permit 41H 58294 00 was issued to
for the expansion. AR 258 - Heaston Aff. Ex. 7. DNRC contracted with the City
for use of water stored in Hyalite. AR 247, Heaston Aff., Ex 6. The City planned
use of water under Provisional Permit 41H 58294 00 (and other rights) to meet future
demand in the Disputed Area. AR 233 - Heaston Aff. ¶ 12. DNRC’s Hearings
Examiner confirmed that the City has a legal right to deliver water from Hyalite
Reservoir to the Disputed Area for municipal use.1 AR 5-6. This Court should
determine, based on the plain language of § 85-2-402(2)(a), MCA, that water rights
issued for the City’s future needs were “issued” for the City’s planned use.2
Utility Solutions’ application interferes with the City’s planned use of water
in the Disputed Area. AR 232, Heaston Aff. ¶ 14-15. Neither Appellees nor the
1 When DNRC contracted with the City to meet future demand under Provisional
Permit 41H 58294 00 it reduced the volume of water set aside for future use under
Reservation No. 70118-41H. AR 279. Utility Solutions asserts the place of use
for the Provisional Permit does not include the Disputed Area. US Answer at 20.
Utility Solutions is wrong. Compare AR 230 - Heaston Aff., Exs 7 and 11.
2 The City holds other interests in water rights that can be used for municipal
purposes in the Disputed Area. AR 232 - Heaston Aff. ¶ 12. For the purpose of
arguing this case the City has elected to focus on Provisional Permit 41H 58294 00
because DNRC expressly “issued” the permit to meet the City’s future needs.
Regarding rights and interests in held by the City in other water rights, the City’s
position remains that any interest in water that can be used within the City’s planning
boundary was “issued” for the City’s planned use.
CITY OF BOZEMAN'S REPLY BRIEF | 9
district court dispute that the plain meaning of “adversely affect” encompasses
Utility Solutions’ interference with the City’s planned use. Utility Solutions openly
"does not care what Bozeman plans. It intends to offer water supplies at costs less
than what any landowner would incur to develop his own supplies, and less than
what Bozeman will charge." See AR 212. DNRC says in lieu of protection for its
planned use, the City can condemn other public water systems. Hearing Transcript
at 37:2-6. DNRC’s comment ignores the legal, financial, and practical implications
of using condemnation as a substitute for sound public planning.
In short, it is conceded that the City’s planned use of water in the Disputed
Area will be “adversely affected” under the plain meaning of statutory language.
The Court’s inquiry should end there. In re Archer, at 5. This Court should rule,
based on the plain language of § 85-2-402(2)(a), MCA, that Utility Solutions’
change application adversely affects the City’s planned use for which a water right
has been issued.
2. The Growing Communities Doctrine Provides Context for
Statutory Protection of Planned Use of Water to Meet Future
Municipal Demand.
Appellees’ arguments, and the district courts’ decision, largely ignore the
plain language of the statute. They contend instead that the City’s planned use is
not adversely affected within the meaning of the WUA. That position is based on
CITY OF BOZEMAN'S REPLY BRIEF | 10
pre-WUA caselaw and selective context.3 DNRC Answer at 17; US Answer at 14.
According to the district court,
[t]he adverse effect test in the MWUA is meant to ensure water right
holders can continue to reasonably exercise their water rights with the
same amount of water being available to them at the same rate, at the
same timing, and the same location.
Order on Petition for Judicial Review at 11.
Cases cited in support of DNRC’s Final Order show, and the City does not
dispute, that interfering with the availability of water from a source can adversely
affect other water rights. Appellees’ and the district court cite selected provisions
of the WUA that codify the same principle as context for their narrow interpretation
of the protections in § 85-2-402(2)(a), MCA. Their argument ignores other
provisions of the WUA, including the Growing Communities Doctrine.
No authority cited by Appellees or the district court says reducing the
availability of water from a shared source is the only way another’s interests can be
adversely affected. The question presented is whether a municipality’s adopted
3 Utility Solutions argues that legislative meaning should be derived from common
law ‘terms of art” found in § 85-2-402(2)(a), MCA, but points only to defined terms.
US Answer at 14. It bears notice that ‘adverse effect’ is not a common law term of
art. Prior to adoption of the WUA a change in water use was allowed if it did not
“injure” subsequent appropriators. Sherlock v. Greaves, 106 Mont. 206, 76 P.2d
87, 93 (1938) (citing Section 7095, Rev. Codes).
CITY OF BOZEMAN'S REPLY BRIEF | 11
planned use water is adversely affected by a change that interferes the ability to use
water as planned. Nothing cited by Appellees or the district court addresses that
question. The case appears to be one of first impression.
Expansion of common law prior appropriation in the WUA is evident on the
face of the provision at issue. DNRC says only “four specific categories of interests
that may not be adversely affected by a change in appropriation right:
1. “[T]he use of existing water rights of other persons,” (§ 85-2-
402(2)(a), MCA);
2. “[O]ther perfected or planned uses or developments for which a
permit or certificate has been issued or for which a state water
reservation has been issued,” (Id.);
3. “The water quality of an appropriator,” § 85-2-402(2)(f), MCA;
and
4. “The ability of a discharge permitholder to satisfy effluent
limitations of a permit issued in accordance with Title 75, chapter
5, part 4,” § 85-2-402(2)(g), MCA.
DNRC Answer at 12.
Water quality is not an element of a water right at common law or under the
WUA. See e.g., ARM 36.12.101(24). Yet, water quality may not be “adversely
affected” by a change application. § 85-2-402(2)(f), MCA. One case reported
prior to adoption of the WUA addresses “water quality” in the context of water
rights. In Missoula Pub. Serv. Co. v. Bitter Root Irr. Dist., 80 Mont. 64, 257 P.
CITY OF BOZEMAN'S REPLY BRIEF | 12
1038, 1040 (1927), an irrigation district was sued for periodically discharging water
diverted from one source into the City of Hamilton’s water supply. This Court held
that adding a “large volume of water, turbid in comparison with the waters of
Skalkaho” constituted a public nuisance.4 Clearly, the so-called “adverse effect
test” is not limited to ensuring “the same amount of water being available to them at
the same rate, at the same timing, and the same location.” Other interests are also
protected.
In the same way, protection afforded to permitholders expands the common
law doctrine of prior appropriation. § 85-2-402(2)(g), MCA. The WUA
recognizes instream flow as a beneficial use. § 85-2-102(5)(c), MCA; see Kevin J.
Smith, Permitting A Natural Flow in A Prior Appropriation System: Dekay v. United
States Fish and Wildlife Service, 1 Great Plains Nat. Resources J. 97, 113 (1996)
citing Lake Shore Duck Club v. Lake View Duck Club, 50 Utah 76, 166 P. 309
(1917) (at common law leaving water instream was considered wasteful).
The key flaw in Appellees’ too narrow view of the WUA as a codification of
common law appropriation is enactment of the Growing Communities Doctrine.
No authority cited by Appellees or the district court deals with planned use of water
4 See Fabian v. Collins, 3 Mont. 215, 224 (1878) (nuisance recognized as one of
three remedies for the diversion of water).
CITY OF BOZEMAN'S REPLY BRIEF | 13
for future municipal demand. If the Court resorts to context for interpreting the
language at issue it must include the Growing Communities Doctrine.
DNRC says “[i]n the State of Montana, no type of water use or user is given
preferential treatment.” DNRC Answer at 34. That is not true. Water rights held
for municipal use are treated differently in practice and in law. By statute, water
users must show they hold the possessory interest or have written permission from
the person that does. See § 85-2-311(1)(e), MCA; § 85-2-402(2)(d), MCA.
DNRC’s Guidance for Municipal Purposes & Water Rights has a section called
“Issues Unique to Municipalities.” AR 286. DNRC recognizes that, unlike other
water users, municipalities “supply water to the end user and does not maintain direct
ownership of the Place of Use.” For that reason, DNRC “is able to look at a
properly adopted growth policy under § 76-1-601, MCA for purpose of possessory
interest in the Place of Use.” Contrary to DNRC’s argument, municipal water users
are treated differently.
Municipal water rights are also treated differently under the Growing
Communities Doctrine. For example, unlike other water rights, “a water right that
is claimed for municipal use by a city, town, or other public or private entity that
operates a public water supply system, as defined in § 75-6-102, MCA, is presumed
CITY OF BOZEMAN'S REPLY BRIEF | 14
to not be abandoned” if certain conditions are met.5 § 85-2-227(4), MCA. See
City of Helena v. Cmty. of Rimini, 388 Mont. 1, 14, 397 P.3d 1, 11 (2017)
(recognizing adoption and expansion of growing communities doctrine beginning in
1999); see also United States Dep't of Army Corps of Engineers (“USACOE”), 396
Mont. 433, 436, 445 P.3d 828, 830 (2019). Another difference codified in the
Growing Communities Doctrine is the ability of municipal users to reserve water for
future needs. See § 85-2-316, MCA.
Not only does DNRC wrongly assert that no type of water right is treated
differently in Montana, it wrongly asserts that the City’s effort to protect its planned
use of water based on adoption of its Growth Policy is “untethered from any existing
law.” DNRC Answer at 27. As shown, DNRC’s own Guidance for Municipal
Purposes & Water Rights tethers the WUA requirement to show a possessory
interest directly to adoption of a growth policy under § 76-1-601, MCA. The tether
between water use and planning was recognized by this Court in City of Helena. The
Court looked at construction of an oversized pipeline in 1921 and agreed “[t]he most
5 The statute does not apply to Utility Solutions because the company does not
operate a public water system. AR 0042 (Change Application - “purpose of
proposed change is to extend the Place of Use of this water right to provide these
properties with the ability to either connect to the existing Four Corners County
Water and Sewer District or to provide their own public water system utilizing this
water right.”).
CITY OF BOZEMAN'S REPLY BRIEF | 15
reasonable inference from this conduct is that the City was planning for future
growth;” based on that finding the Court held,
Section 85-2-227(4), MCA, comports with the purpose of the growing
communities doctrine by creating a presumption of nonabandonment
when a city is planning for its future water needs and requires
flexibility in such planning efforts.
City of Helena, 388 Mont. at 14 (emphasis supplied). See also USACOE, 396
Mont. at 436 (prima facie status of Fort Peck’s claimed volume overcome by
evidence showing it has not used that volume “and has no plan to do so in the
future”). It is clear that the planned use of water to meet future municipal demand
use is tethered to municipal planning under § 75-6-102, MCA.
3. Interference with the City’s Possessory Interest in the Place
of Use Adversely Affects the City’s Planned Use of Water
This case requires the Court to consider, for the first time, whether protection
of planned uses extends to more than availability of water from a shared source. As
discussed previously, the plain language of § 85-2-402(2)(a), MCA, does not say
only discrete elements of a water right are protected from adverse effect. It protects
planned uses for which a water right has been issued. Based on plain language in
the statute the City should prevail. In re Archer, 332 Mont. at 5.
It is evident that a planned use of water requires both a source of water and a
place to use water. If either is interfered with the planned use is adversely
CITY OF BOZEMAN'S REPLY BRIEF | 16
affected. The Growing Communities Doctrine protects a city’s planned use of
water based on
a formal study, prepared by a registered professional engineer or
qualified consulting firm, that includes a specific assessment that using
the water right for municipal supply is feasible and that the amount of
the water right is reasonable for foreseeable future needs; or
§ 85-2-227(4)(c), MCA.
The forgoing statute supports the City’s interpretation of § 85-2-402(2)(a),
MCA, because it is not feasible to use any amount of water for future needs without
a possessory interest in the place of use. Equally evident is that the planned place
of use cannot be the City’s existing place of use. The tether between municipal
water use and planning is consistent with the Growing Communities Doctrine in
other prior appropriation states. See e.g., Idaho Code, Section 42-202B and
Revised Code of Wash. 90.03.383(2)(b) (tethering place of use for municipal water
rights to municipal planning).
If the Court finds it necessary to resort to context and structure, it must
harmonize § 85-2-402(2)(a), MCA, with all parts of the WUA, including the
Growing Communities Doctrine. This is easily accomplished based on the
requirement for water users to show they hold the possessory interest or have written
permission of the person that does. See § 85-2-311(1)(e), MCA; § 85-2-402(2)(d),
MCA. Unlike places of use, possessory interests do not overlap. In recognition of
CITY OF BOZEMAN'S REPLY BRIEF | 17
the fact that cities do not own the place of use for municipal service DNRC’s
published Guidance for Municipal Purposes & Water Rights says that a duly adopted
growth policy satisfies the requirement to cities to show they holds the possessory
interest. AR 286.
Utility Solutions discounts the City’s satisfaction of the possessory interest
requirement, arguing growth policies have no regulatory force. That argument is
defeated by the statute quoted in support, which says a "growth policy is not a
regulatory document and does not confer any authority to regulate that is not
otherwise specifically authorized by law or regulations adopted pursuant to the law.”
US Answer at 35 citing § 76-1-605(2)(a), MCA (emphasis supplied). The statute
at issue in this case specifically prohibits change applications that adversely affect
planned uses. § 85-2-402(2)(a), MCA. The regulatory effect is derived from the
WUA not the planning act. This court should rule a “planned use” of water under
the change statute may be established by adoption of a growth policy under Title 76.
4. Objectors Have Standing When a Water Right Application
Adversely Affects a Broad Range of Interests
The Legislature provided “[a] person has standing to file an objection under
this section if the property, water rights, or interests of the objector would be
adversely affected by the proposed appropriation.” § 85-2-308(3), MCA. The
district court decided that the language of standing must conform with the too narrow
CITY OF BOZEMAN'S REPLY BRIEF | 18
interpretation of § 85-2-402(2)(a), MCA based only on common law authorities
showing that interference with water availability can adversely affect other rights.
The district courts interpretation of the standing statute, and Appellees arguments
based thereon, are inconsistent with statute and the prior holding of this Court.
Previously, this Court ruled that “personal environmental and recreational
interests of the members in the Big Hole River basin, distinct from the public at
large, that arguably could be adversely affected by the temporary preliminary decree
in the Big Hole River basin” were sufficient to pursue a remedy against
appropriators. Montana Trout Unlimited v. Beaverhead Water Co. (“MTU”), 361
Mont. 77, 81, 255 P.3d 179, 181 (2011) (emphasis supplied). Under that holding it
is clear objectors may seek a remedy for injury to interests other than the ability to
divert water from a source.
In MTU, the Court compared prudential standing considerations to § 85-2-
308(3), MCA. Prudential standing requires a past, present, or threatened injury
“that would be alleviated by successfully maintaining the action.” Heffernan v.
Missoula City Council, 360 Mont. 207, 220–21, 255 P.3d 80, 91 (2011). If Trout
Unlimited can seek redress for threatened injury to its members’ environmental and
recreational interests based on prudential considerations, there is no principled way
to deny the City of Bozeman any right to seek redress for acknowledged injury to its
CITY OF BOZEMAN'S REPLY BRIEF | 19
planned use of water for future needs under a statute that grants standing to protect
property and interests from adverse effect.
It is undisputed that the City’s interests will be adversely affected by the
Utility Solutions’ change application. AR 232 - Heaston Aff., ¶¶ 13 and 14. DNRC,
and the district court, interpreted § 85-2-402(2)(a), MCA, narrowly in derogation of
the Legislature’s clear requirement for liberal interpretation. § 85-1-103, MCA.
Rather than using the standing statute as context, they used the narrow interpretation
of § 85-2-402(2)(a), MCA, to justify precluding the City’s from seeking a remedy
expressly provided for in § 85-2-308(3), MCA. Respectfully, the DNRC and
district court got it backward. Context of the WUA supports a more liberal
application of the protections found in § 85-2-402(2)(a), MCA.
5. DNRC Finding that Change Application Fills in Service Area
Gap is Clearly Erroneous and Prejudicial to City’s
Significant Interest
Appellees, and the district court, do not dispute DNRC erroneously found that
Utility Solutions’ proposed service area expansion will fill in a service area gap that
does not exist. AR 23 (Finding of Fact 10). AR 89; see also AR 243 and 282
(Heaston Aff., Exs. 2 and 12). Utility Solutions' Application misidentified the
City’s service area based on an outdated growth policy boundary. AR 89; see also
AR 243 and 282 (Heaston Aff., Exs. 2 and 12). DNRC and the district court
essentially find the error to be harmless.
CITY OF BOZEMAN'S REPLY BRIEF | 20
But this Court holds, for obvious reasons, that municipal service areas do not
overlap. City of Billings v. Pub. Serv. Comm'n of Montana, 193 Mont. 358, 368–
69, 631 P.2d 1295, 1302 (1981). As a direct consequence of DNRC’s erroneous
finding, and contrary to law, two municipal water users now hold the possessory
interest to serve the same area. DNRC’s error will force the City to adopt a new
plan. A significant expenditure of public money has been wasted. AR 232. By
interpreting § 85-2-402(2)(a), MCA, narrowly and discounting its erroneous finding,
DNRC has denied the City any remedy for significant injuries caused by Utility
Solutions’ Application.
There was no gap between Utility Solutions and the City’s service areas with
the Application was accepted by DNRC. Opening Brief, Statement of Facts 1 and
2. DNRC’s contrary findings are clearly erroneous being unsupported by
substantial evidence in the record and its error has prejudiced the City’s interests.
If DNRC’s order is not reversed for the violation of § 85-2-402(2)(a), MCA, the
Administrative Procedures Act provides alternative grounds for reversal or revision
of DNRC’s Final Order. § 2-4-704, MCA.
/ / /
CITY OF BOZEMAN'S REPLY BRIEF | 21
III. CONCLUSION
For the reasons presented, the City of Bozeman respectfully requests that the
Court reverse orders entered by DNRC and the district court and order denial of
Application to Change Water Right 41H 30110660. Alternatively, the City requests
that approval of Application to Change Water Right 41H 30110660 be modified to
exclude the City’s Growth Policy and Water Facility Planning boundaries in
existence on September 22, 2017, (when the Application was found correct and
complete) from Utility Solution’s place of use.
Dated this 24th day of February, 2020.
PETER G. SCOTT, LAW OFFICES, PLLC
/s/ Peter G. Scott
Peter G. Scott, Attorney for City of Bozeman
CERTIFICATE OF COMPLIANCE
Pursuant to Rule 11, Montana Rules of Civil Procedure, Appellant certifies
that this brief is printed with proportionately spaced Times New Roman text
typeface of 14 points, is double-spaced except for footnotes and intended quotes.
This brief contains 4,933 words, as calculated by Microsoft Office Word 2016,
excluding the cover, Table of Contents, Table of Authorities, Certificate of
Compliance and Certificate of Service.
CITY OF BOZEMAN'S REPLY BRIEF | 22
DATED this 24th day of February, 2020.
PETER G. SCOTT, LAW OFFICES, PLLC
/s/ Peter G. Scott
Peter G. Scott, Attorney for City of Bozeman
CERTIFICATE OF SERVICE
This certifies that a true and correct copy of the foregoing was served upon all
parties listed below as stated and via United States First Class Mail, Postage Prepaid,
on this 24th day of February, 2020.
Barbara Chillcott
Cameron Boster
Special Assistant Attorneys General
Montana Department of Natural
Resources and Conservation
1539 Eleventh Avenue
PO Box 201601
Helena, MT 59620-1601
(406) 444-3776
Barbara.chillcott@mt.gov
Cameron.boster@mt.gov
Attorneys for DNRC
Matthew W. Williams
Williams & Jent, PLLP
506 E. Babcock
Bozeman, MT 59715
(406) 586-1373
(406) 586-4548 (fax)
Mattheww53@aol.com
Attorney for Utility Solutions, LLC
City of Bozeman
c/o Tim Cooper, Attorney
PO Box 1230
Bozeman, MT 59771-1230
(406) 582-3200
Electronically signed by Diana Tyrrell on behalf of Peter G. Scott
Dated 02/24/2020