Water Assessments a New Tax?

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By Aubyn Curtiss SD1

December 1, 2005


            Recent notification to property owners of a pending assessment for each water right they claim has not been understood or well-received.  Even some of us hearing first hand proponents’ testimony about the urgent need to pass House Bill 22 were not totally convinced that pouring millions of dollars towards earlier completion of the adjudication process will enable the state to meet its goals. 


            Ever increasing development and demands for water prompted the 1972 Constitutional Convention policymakers to charge the legislature to enact what is the Montana Water Use Act to provide for the administration, control, and regulation of water rights, and a system of centralized record keeping. Six years after the Department of Natural Resources began to investigate claims and determine existing rights, the Legislature again passed an act setting up a Chief Water Judge and setting in place a more efficient system to verify existing rights and quantity of water being put to a beneficial use. The Montana Supreme Court issued an order which required all persons claiming existing water rights to file with the DNRC by January 1, 1982.  Failure to do so would result in a presumption of abandonment.  By the time the filing date was extended to April 30th, more than 200,000 claims had been filed.


            In spite of Montana’s attempts to determine who is entitled to how much water and where it is being used, the state has fallen far behind, largely due to the fact that not nearly enough personnel have been committed by the DNRC to do the investigation and documentation involved, and the Departments allegations that the Legislature has failed to appropriate enough money to employ enough workers.  Sponsor of the legislation providing for a new infusion of money to now do the job, told the House Natural Resources Committee:  “Water is the gold of the 21st century.  Montana is in a perilous position.  We don’t have a legal, factual claim to our water.” His statement alluded to the fact that no one’s rights, no matter what they claim, can actually be defended until they receive a final decree issued by the water judge. Individual users can be challenged by other entities including interests which are simply claiming water for in-stream flow for fishery enhancement, federal entities, and other states, as their aquifers are becoming depleted, are looking to Montana water to meet their own demands for more water.


            Although issues may be more sophisticated these days, the old saying:  “whisky is for drinkin’, water is for fightin’” unfortunately still describes too many scenarios. Testimony offered by the Department of Natural Resources and Conservation advised committee members that HB 22 will provide the means to complete the examination of  57,000 claims within 10 years and will enable the Water Court to issue Decrees on the remaining 32 basins within 15 years.  Without some means of accelerating the project, at the current staffing level, completion would not be achieved until 2043.”  Claims in the Clark Fork Basin are among those still waiting to be adjudicated.


            Two paragraphs from DNRC’s formal testimony before the Senate Judiciary Committee read: “Adjudication of water rights is a basic component of western water law and administration.  Most western states have or have had comprehensive adjudication of water rights.  Not doing so is not an option.  Water rights are private property rights, which require legal definition.  Legally defined water rights form the basis for all administration and enforcement.”


            “Without completing the adjudication, Montana is in a significantly weaker position in protecting our water use against demands and diversions to our neighboring states, both upstream and downstream, as well as by Canada.”


            Montana’s constitution states “all surface, underground, flood and atmospheric waters within the boundaries of the state are the property of the state for the use of its people—  Consequently those who claim water rights do not own the water.  What they have is a right to use the water according to state guidelines.  Water rights in Montana are guided by the prior appropriation doctrine, better known as the first in time, first in right, and the  legislature has been adamant in defending prior and existing rights, attempting to make sure that claimants receive adequate notification of any changes in required reporting, and opposing efforts by state agencies to assume abandonment because of what they determine not to be timely response to their directives.


            For that reason some senators did not agree with provisions in HB 22 which, under certain circumstances relative to collection of the assessments, allows the Department of Revenue to file a lien against the water right in the county where the water is put to beneficial use. Water rights are valuable property rights and securing those rights may depend upon the method of notification sanctioned by the Department.  Efforts to spell out the best possible way to maintain the integrity of the notification process were to no avail, and at least partially contributed to the six negative votes against the bill in the Senate.


            Many deplored the fact that this bill with such far-reaching ramifications  was presented so late in the session, but it was almost unanimously supported by people of the agricultural community. One water consultant who had worked with DNRC alluded to inaccuracies relative to past performance of the Department and expressed skepticism about its ability to meet its commitment as delegated in the bill, but almost all agreed that the 20 years already spent on adjudication is entirely too long, and that the process must be completed before all memory is lost of how water has historically been put to use, and how the process should work.


            This is a precedent setting bill.  It is the first time annual fees have been assessed related to water use, and the first time the Department of Revenue has been given the authority to place liens against claimants for non-payment of water assessment. Water users will be wise to make certain information relative to their uses are accurate and they will be wise to closely monitor the process to be sure the benchmarks set forth in this legislation are met by the Department.  There is much to be gained, but there is   jeopardy involved, as well.


            Apprehensive that the Governor will fail to follow through in calling a special session to address the education funding issue, 19 Republican legislators have directed the Secretary of State to poll the legislators  to see if a majority is in favor of calling a special session on January 10th.  The legislators believe that because Montana has a substantial budget surplus, three issues of vital interest to Montanans should be addressed: (1) property tax relief, (2) transitional K-12 school funding while a new formula is being developed, and (3) water rights protection.


            This call may result in the Governor’s finally biting the bullet and calling a December session to address the court ordered school funding issue, If not, and the legislature is convened in January, it offers a reprieve for water rights claimants, because it is the intent to replace the $ 31 million to be raised from water users with funds derived from a portion of the state’s surplus.  One needs not be reminded that Republicans are in the minority, so the success of the January proposal hinges on getting support from Democrats as well.  It promises to offer an attractive solution to funding the adjudication without imposing the assessment burden on water users.


                                                JANUARY ’06 UPDATE


To date, the Special Session is history, having been called by the Governor the week of December 14th.  Although enough signatures of legislators were gathered that week to appropriate state funds to pay for the adjudication and relieve water claimants of paying the assessments, the Governor and the Legislative Leaders refused to expand the scope of the special session to even allow the Senate consideration of that option. Water users now must conform to the provisions of House Bill 22, or risk actions of the Department of Revenue relative to initiating liens against the water rights if assessments are not honored.  I consider this lack of consideration for water users to be A BREACH OF TRUST and an abuse of government which ignores the expressed policy of the original water adjudication enabling act, the intent of which was to quantify water use and determine how much and where it was being put to beneficial use, while making every effort to protect existing water rights.  House Bill 22, if assessments are not met places them in jeopardy.