Montana Supreme Court Upholds DNRC’s Interpretation of Mine Dewatering Under MWUA

Introduction

In the landmark case of Montana Trout Unlimited et al. v. Montana Department of Natural Resources and Conservation and Tintina Montana, Inc., the Supreme Court of Montana addressed critical issues surrounding water rights and the permitting process under the Montana Water Use Act (MWUA). The appellants, including environmental and recreational organizations, challenged the Department of Natural Resources and Conservation’s (DNRC) decision to grant a water use permit to Tintina Montana, Inc. for its mining operations. This commentary delves into the intricacies of the case, the court’s reasoning, the precedents cited, and the broader implications for Montana’s water regulation landscape.

Summary of the Judgment

The Montana Supreme Court affirmed the lower court's decision, which upheld the DNRC's Final Order granting Tintina Montana, Inc. a water use permit under the MWUA. The court addressed three primary issues:

Whether the appellants had standing to object to the DNRC's determination.
Whether the DNRC correctly categorized Tintina's removal and discharge of water as neither a beneficial use nor waste, thereby excluding it from the MWUA permitting process.
Whether the DNRC's interpretation of the MWUA contravened Article IX of the Montana Constitution.

The court concluded that the DNRC’s longstanding interpretation of the MWUA was consistent with both statutory and constitutional provisions, thereby rejecting MTU's arguments challenging the permit's validity.

Analysis

Precedents Cited

The court referenced several key precedents that have shaped the interpretation of the MWUA concerning mine dewatering:

In re Application for Beneficial Water Use Permit No. 24591-g41H by Kenyon-Noble Ready Mix Co. (1981): Established that mine dewatering does not constitute waste but also does not qualify as a beneficial use requiring a permit.
In re Applications for Beneficial Water Use Permits by CR Kendall (1999): Reinforced the stance that disposal of water without a beneficial use does not fall under MWUA’s permitting scheme.
Clark Fork Coalition v. Mont. Dep't of Natural Res. & Conservation (2021): Differentiated the MWUA’s purpose from environmental statutes, emphasizing that MWUA focuses on water rights rather than comprehensive water resource management.
Diamond Cross Props. v. Mont. Dep't of Natural Resources (2008): Although cited by dissent, it was noted to focus on different contexts and did not alter the DNRC's consistent stance on mine dewatering.

Legal Reasoning

The court's reasoning hinged on the DNRC's consistent interpretation of the MWUA over decades. The DNRC distinguished between beneficial use and waste, categorizing mine dewatering as a "third category" that does not fit within the traditional binary framework. This interpretation was supported by the DNRC's Dewatering Policy and prior administrative decisions. The court emphasized the principle of agency deference, especially when interpretations have stood unchallenged for extended periods and align with legislative intent.

Additionally, the court addressed constitutional challenges, reiterating that the MWUA's primary purpose is the administration of water rights, not comprehensive water resource management. Thus, the classification of mine dewatering outside the beneficial use or waste categories did not infringe upon Article IX of the Montana Constitution.

Impact

The affirmation of DNRC's interpretation has significant implications for Montana's water management:

Regulatory Scope: Mine dewatering operations like Tintina's will not require beneficial use permits under the MWUA, potentially leading to increased groundwater extraction without direct oversight from the DNRC.
Environmental Concerns: Environmental and recreational groups may face challenges in regulating and mitigating the impacts of large-scale mine dewatering, as these activities fall outside the MWUA's permitting regime.
Legislative Response: There may be calls for the Montana Legislature to revisit and possibly amend the MWUA to address the gaps identified by MTU and to ensure comprehensive water resource protection.
Precedential Consistency: The decision upholds longstanding administrative interpretations, maintaining consistency in water rights adjudication and permitting practices in Montana.

Complex Concepts Simplified

Beneficial Use

Under the MWUA, a "beneficial use" refers to using water for the benefit of the appropriator, others, or the public, encompassing activities like agriculture, mining, domestic use, and recreation. For a use to be deemed beneficial, it must contribute positively to these areas.

Mine Dewatering

Mine dewatering involves the removal of groundwater from mining operations to facilitate extraction. The water removed can be partially used in the mining process and the excess ("Remainder Water") is treated and returned to the aquifer. The key legal question is whether this excess water removal constitutes a "beneficial use" or "waste" under the MWUA.

Montana Water Use Act (MWUA)

The MWUA is Montana's primary statute governing water rights, prioritizing beneficial use and preventing wasteful practices. It establishes a permitting system for water appropriation and outlines specific exemptions where certain water manipulations do not require permits.

Conclusion

The Supreme Court of Montana's decision in MONTANA TROUT UNLIMITED v. DNRC and Tintina Montana, Inc. upholds the DNRC's longstanding interpretation of the MWUA, classifying mine dewatering as neither a beneficial use nor waste. This categorization effectively excludes such activities from the MWUA's permitting process, maintaining consistency with past administrative decisions and legislative intent. While the decision preserves regulatory stability, it also opens avenues for environmental advocacy groups to seek legislative reforms to address perceived gaps in water resource management. The ruling underscores the delicate balance between administrative agency interpretations and statutory mandates, highlighting the ongoing challenges in comprehensively managing water resources in resource-dependent states like Montana.

Dissenting Opinion

Justice Laurie McKinnon, joined by Justice Ingrid Gustafson, provided a robust dissent, arguing that the majority's decision creates a significant loophole in Montana's water regulation framework. The dissent contends that excluding mine dewatering from the MWUA's permitting process undermines the statute's purpose to protect senior water rights holders and prevent environmental degradation. It emphasizes that comprehensive regulation, as mandated by the Montana Constitution, cannot be achieved if substantial water withdrawals are left unregulated. The dissent calls for a reevaluation of the MWUA to ensure that all forms of water manipulation, especially large-scale mine dewatering, are subject to appropriate oversight and permitting.

This opposing view highlights the tension between established administrative interpretations and the evolving needs for environmental protection and sustainable resource management. It serves as a critical reminder of the importance of legislative clarity in statutory language to prevent unintended regulatory gaps.