Water Rights and Usage in Montana: What Property Owners Should Know
Water rights authorize the beneficial use of Montana’s water resources, including for residential and domestic use, irrigation, livestock, mining, municipal water, and conservation purposes. However, water rights often cause confusion even for seasoned water users. Working with a water rights attorney can help you more effectively utilize your water resources and protect your rights to such use.
Water rights authorize the legal, beneficial use of water resources in the state of Montana. A lack of water or the legal right to use the available water can cause significant issues for project development and land utilization. As part of a land purchase or development project, it is important to include a water rights report and analysis in due diligence to ensure that there is sufficient water to meet the needs of the desired land use or project.
What Are Water Rights?
A water right gives the holder the legal right to use a certain amount of water to the exclusion of other water users. Water rights consist of several elements, including the purpose for which the water is being used, the water source, the point at which the source is diverted for use, the amount of water being used, the place of use, the period of time in which the water can be used, and the priority date of the right. The priority date is the element that authorizes a water right holder to use the water under the right prior to another user. This element stems from the “first in time, first in right” prior appropriation doctrine, meaning that the first person to beneficially use a particular water source has priority to use that source before others.
In Montana, water rights are generally appurtenant to the land on which they are used and transfer with the ownership of that land. However, this rule is flexible, and today water rights can be reserved from land transfers or even severed from their place of use and used in a new location.
Purposes of Water Rights in Montana
Irrigation: Irrigation water rights authorize consumptive surface or groundwater use for irrigation purposes, including flood irrigation and sprinkler irrigation.
Residential/Domestic: Domestic water rights authorized consumptive surface or groundwater use for household and residential purposes.
Commercial/Industrial: Industrial water rights authorize consumptive surface or groundwater use for commercial and industrial purposes.
Municipal: Municipal water rights authorize consumptive water use for municipalities and unincorporated towns. These are not individual water rights, but are instead held by municipalities or water and sewer districts for the benefit of the public. Municipal water rights may be utilized for a variety of purposes, including domestic use, lawn and garden, or industrial purposes.
Recreational: Recreational water rights authorize nonconsumptive water use for recreational purposes, including for private fish ponds.
Stock water rights authorize consumptive water use for livestock watering purposes.
Instream flow water rights authorize nonconsumptive water use to protect and preserve fisheries habitat.
How Water Rights Are Acquired and Maintained
There are multiple types of water rights, but the most common are:
Existing rights: Existing water rights are water rights filed prior to July 1, 1973, and are legally protected based upon the filing of a statement of claim for historical water use. Today, the Montana Water Court is working to adjudicate these claims to verify that they accurately reflect such historic use.
New appropriations: New water appropriations require a water user to obtain a permit from DNRC. This process requires a technical analysis of the water use and for the user to demonstrate that no other users will be adversely affected by the new appropriation. It is important to note that some areas of Montana (including the Gallatin River Basin) are closed to new appropriations, and users can no longer obtain permits.
Exempt water rights: Groundwater appropriations less than ten acre-feet per year are exempt from the permit process discussed above. Instead, water users can complete the appropriation and then file a Notice of Completion of Groundwater Development with DNRC.
The importance of “beneficial use”
Water rights must be tied to a beneficial use, meaning that the water user has appropriated the water for the user’s benefit or the benefit of the public. Beneficial uses include irrigation, livestock water, domestic, fish and wildlife, municipal, power generation, mining, and recreational use, as well as aquifer recharge, storage, and mitigation.
Abandonment and non-use consequences
Water rights must be used in order to remain legally enforceable. When a water user intentionally does not use an existing water right for a certain period, generally ten years, that water right is considered prima facie abandoned and the water user must demonstrate a legitimate reason for such non-use in order to maintain the water right.
Transfers, sales, and changes in use
Water right transfers, sales, and leasing, and changes in use must be documented and often approved by the Montana Department of Natural Resources and Conservation (“DNRC”). While transfers are effectuated by a form filing, changes to a water right (including changes to place of use, purpose, point of diversion, and other elements) require the water user to file a change application with DNRC. Similar to a new appropriation permit, a water user seeking approval of a change application must demonstrate that the change will not have an adverse impact on other water users. Further, a change cannot exceed the historical water use associated with the claim.
Common Legal Issues with Water Rights
Disputes between water users
Water rights give the holder the legal right to use water under the right, but not to the point of adversely impacting another water user on the same source. Disputes can arise between water users on a shared source, particularly in a drought or other period of water shortage. There are multiple mechanisms for resolving such disputes, and a water rights attorney can help guide you through these options.
Overlapping claims and adjudication
If you hold an existing water right in Montana, your right will go through the adjudication process with the Montana Water Court. During this adjudication, the Water Court will examine the statement of claim for the water right, together with supporting evidence for the claim, to determine whether the claim accurately reflects historical water use on the ground. Other water users also have the right to file objections to another user’s statement of claim during adjudication, which can result in a dispute that must be resolved before the Water Court.
Impact of drought or environmental restrictions
As discussed above, conflicts can arise between senior and junior water users during drought or other periods of water shortage. If limited water is available, junior users may be unable to fulfill their water needs and may need to negotiate with senior users or work through other solutions, such as water leasing.
Development or subdivision concerns
It is essential to address water needs during development and subdivision planning, including needs for residential use and open space irrigation. In 2024, Montana’s First Judicial District Court significantly restricted the use of exempt groundwater wells in phased subdivisions, holding that all phases of a subdivision are considered a combined appropriation for purposes of the 10-acre feet limitation. As a result, developers must now be more strategic in water planning and may need to consider alternate avenues for obtaining water rights, including through water use agreements with neighboring users.
When to Consult a Montana Water Law Attorney
Given the essential nature of water rights to land use and development, it is important to understand your water rights and address potential issues that may arise. A water rights attorney will guide you through the adjudication process for existing claims, help you navigate a new appropriation or change application, or provide insight into water planning for your development project.
KLH Advisors has significant experience working with water rights in Montana. Our associate, Clare Ols, prior to joining KLH Advisors, guided water users through the adjudication process, the new appropriations permit application, and change applications. Our firm also works closely with developers to navigate the new exempt groundwater rules and to prepare water user agreements among private water users.
Contact us today to discuss how KLH Advisors can help you with your water law questions.
