Montana Legislature passes bill exempting wells on family-transfer land

By Zachariah Bryan UM Community News Service

Matt and Jen Cottle, ranchers near Bigfork, want to build a house for their son but they have found themselves in the crossfire of a heated legislative debate over Montana’s water laws.
In a letter addressed to Sen. Mark Blasdel, R-Kalispell, Matt Cottle explained that he and his wife want to take advantage of a provision in state law that allows them to transfer a piece of land they own to their son, who has autism, without going through the public review process. But, to make the new house practical, they also need water, so they had hoped to drill a well without having to get a state permit.

“In today’s struggling economy, families are just trying to make ends meet. It is not uncommon to have multi-generation families living in the same home. Alternatively, family transfers of land is a way to give a loved one something for free – land – to offset the cost of constructing a new home,” Matt Cottle wrote.

The Cottles’ intentions became collateral damage when the Montana Supreme Court decided last year to crackdown on wells that were exempt from review. The court said the exemptions gave users unfair access to limited amounts of water in many areas.

But, a bill in the Montana Legislature is poised to change that.

Senate Bill 248, sponsored by Blasdel, would once more allow exempt wells on family land transfers. The bill, which was passed in the Senate once already, was passed in the House on Thursday, April 13, with a 55-45 vote. Now, it will go back to the Senate, where legislators will consider amendments made in the House.

Both the family land transfers and exempt wells are contentious, with critics saying they are ripe for abuse.

Some developers have used the well exemptions as a loophole to create subdivisions, circumventing the permit processes and senior water rights holders. These neighborhoods, pockmarked with small wells that could each draw up to 35 gallons per minute, or 10 acre feet per year, drained more water than lawmakers had intended and could cause shortages for neighbors with prior water rights.

Keeping ‘kids on the place’

“This is an exempt water bill for family parcels only,” said Rep. Wylie Galt, R-Martinsdale, who introduced the bill when it was up for debate in the House last Wednesday. “This is for people in my line of work, this is for ranchers who want to keep their family and kids on the place.”

An amendment lowered the amount of water that could be drawn from the exempt wells in stream depletion zones, from 35 to 20 gallons per minute or less, not to exceed two acre feet per year. Outside stream depletion zones, the maximum is still 35 gallons per minute, 10 acre feet per year.

Mark Taylor, who represented the Cottle family during legislative hearings in the past two months, described the bill has “truly a rifle shot,” meaning it would affect only a few cases.

“Family transfer parcels are really mom and apple pie to rural Montana,” Taylor said.

In his letter, Matt Cottle wrote that he didn’t understand how “anyone could object to this minor change in law.”

But the bill has drawn fire from many. In hearings before the House and Senate, Taylor was the only person supporting the bill, while the array of those who opposed it represented real estate agents, environmentalists and water rights holders, including farmers, ranchers, industries, counties, cities and others.

A ‘hand grenade’ for water law

“It’s been described as a rifle shot. It’s not a rifle shot. It’s throwing a hand grenade into our existing water law and seeing what’s going to blow up,” said Jeff Barber, representing the Montana Association of Planners, the Montana Smart Growth Coalition and the Clark Fork Coalition.

Property owners can enact family land transfers only once in in a lifetime, per county. Yet many argue the law has been abused to break up land that often up in the hands of non-family members – all without a review of the sale’s potential impacts on neighbors.

According to a survey of county planning departments by the Montana Association of Counties, Montana has recorded 590 family land transfers since October of 2014, the retroactive date the bill would take effect.

Fast growing counties showed bigger numbers. Flathead County reported 170 family transfers while Ravalli and Lewis and Clark counties reported 70 each. Of the 50 reported in Gallatin, 27 percent were sold to non-family members within a year.

That number was about 29 percent in Yellowstone County. Cascade County saw 21 transfers but families held onto the parcels for an average of only 2.3 months before selling them off.

Tara DuPuy, an attorney who administered the survey for the association, testified in March that counties worry that adding an exempt wells provision to the transfer law could increase these abuses.

“There are very legitimate reasons transfer a parcel to an immediate family member without going through the whole subdivision review,” said Harold Blattie, executive director of the Montana Association of Counties, “but there have unquestionably been a number of abuses in the past.”

Derf Johnson, Clean Water Program Director at the Montana Environmental Information Center, was not so reticent about the implications.

“The family transfer exemption is one of the most abused provisions in our land use planning code,” he said in a phone interview. “To allow an exemption on an exemption for water, without having to go through the normal water rights process, is really problematic for us.”

Counties say they can do little to combat abuse of family land transfer exemptions. Gallatin County Planning Director Sean O’Callaghan said the county can review an application to ensure the property owner is using the exemption for its intended purpose, but once approved, it is out of their hands. They could take landowners to court, he said, but it would be hard to prove that a person acted with intent to evade subdivision review.

The main argument against adding exempt wells is that the law would contradict Montana’s prior appropriation doctrine, in which water use is prioritized by the date of the water right, said Abigail St. Lawrence, who testified on behalf of the Montana Building Industry Association and the Montana Association of Realtors.

“I fear this sets us slowly on the path to prioritizing uses of water … by giving particular preference just to family transfers,” she said.

Zachariah Bryan is a graduate student at the University of Montana School of Journalism and a reporter with the Community News Service, a partnership between the school and the Montana Newspaper Association.