Montana Supreme Court Rules that “Diversion” Unnecessary for Appropriation of a Water Right
October 7, 2002

The Montana Supreme Court, in an opinion by Justice Leaphart, recently clarified an issue that was the source of confusion in water law cases in Montana for more than a decade. See In Re Adjudication of Existing Water Rights to the Use of All Water, Both Surface and Underground, Within the Missouri River Drainage Area, Including All Tributaries of the Missouri River In Broadwater, Cascade, Jefferson, and Lewis and Clark Counties, Montana (Basin 41I), No. 00-100 (Mont. 2002). In 1988, in a case commonly referred to as the Bean Lake case, the Montana Supreme Court stated “It is clear therefore that under Montana law before 1973, no appropriation right was recognized for recreation, fish and wildlife, except through a Murphy statute right.” This statement caused significant confusion because it ignored or misread precedent in which such uses had been recognized. Despite these inconsistencies, the Bean Lake statement had been incorporated into 1666 claims in 38 basins by May 2000.

The Water Court had included the Bean Lake statement in an adjudication by the Montana Department of Fish Wildlife and Parks (“DFWP”) regarding five pre-1973 water rights claims in the Missouri River basin based on diversions of water for fish, wildlife and recreation. The DFWP appealed the Water Court’s use of the statement and, although there was an issue as to whether the appeal was procedurally defective, the Montana Supreme Court accepted DFWP’s petition under its power of general supervisory control over the Water Court.

The Montana Supreme Court addressed the following issues 1) whether Bean Lake was correct in its holding that no appropriation right was recognized under Montana law prior to 1973 for recreation, fish, and wildlife purposes, except through a Murphy right statute; 2) whether a valid appropriation of water could be established without a diversion where no diversion is physically necessary for the intended use; and 3) whether the Water Court’s use of the Bean Lake remark violated the Supreme Court’s Water Right Claim Examination Rules 5.II and 5.IV(1)(a).

After examining the history and purpose of the doctrine of prior appropriation and the case precedent, the Court explicitly overruled Bean Lake’s holding that fish, wildlife, and recreation uses are not beneficial uses. Then, finding that common sense rebels against a rigid diversion requirement, the Court determined that diversion is not a requisite element of an appropriation when it is not physically necessary for application to a beneficial use. Thus, instream/in-lake appropriations of water for beneficial use may be valid when the purpose (e.g,. stockwatering, fish, wildlife, and recreation) does not require a diversion. In response to a request to provide clear instructions on how the Water Court should handle fish, wildlife, and recreation claims, the Court instructed the Water Court to identify, review, and hold hearings in a manner similar to Adjudication of Water Rights of Yellowstone River, 832 P.2d 1210 (1992). Finally, the Court found that, through the use of the Bean Lake remark, the Water Court was simply noting a potential legal issue, rather than adopting a substantive policy, so it did not violate the Claims Examination Rules. Justice Rice filed an opinion, in which Justice Gray joined, concurring in the holding that recreational use is a beneficial use and dissenting from the remainder of the opinion.

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