Clark Fork Coal. v. Tubbs

Clark Fork Coal. v. Tubbs, 380 P.3d 771 (Mont. 2016) (holding that the Montana Department of Natural Resources and Conservation’s (“DNRC”) rule that required groundwater developments to be physically connected was inconsistent with the plain language of the statutory “combined appropriation” exception to the exemption of certain groundwater developments from the permit requirement).

Montana uses a comprehensive permit system for water appropriation.  Groundwater appropriations of less than thirty-five gallons per minute and ten acre-feet per year can be exempt from the permit requirement.  The law also contains an exception to this exemption.  Under the Act, groundwater appropriators must acquire a permit if the “combined appropriation” from two or more wells or developed springs that draw from the same source exceeds thirty-five gallons per minute and ten acre-feet per year.  Over time, the DNRC promulgated rules to further define “combined appropriation.”  The first of these rules (“the 1987 rule”) explained that groundwater developments need neither to “be physically connected nor have a common distribution system to be considered a ‘combined appropriation.”  The DNRC replaced this rule in 1993 with a rule (“the 1993 rule”) that instead requires a physical connection to exist between appropriations to count as combined.  Using the Act and the 1993 rule, exempt appropriations of groundwater rose by about 3,000 each year, totaling about 113,000.  These appropriations consume large quantities of water.

In response, the Clark Fork Coalition (the “Coalition”), senior water users affected by this consumption, petitioned the DNRC to declare the 1993 rule inconsistent with the statute.  After the DNRC refused, the Coalition petitioned the First Judicial District Court, Lewis and Clark County to invalidate the 1993 rule as inconsistent with the Act and to reinstate the 1987 rule.  The lower court agreed with the Coalition, reinstated the 1987 rule, and further directed the DNRC to initiate rulemaking to develop a new rule consistent with this ruling.  While the DNRC did not appeal the decision, the Montana Well Drillers Association, the Montana Association of Realtors, and the Montana Building Industry Association (the “Well Drillers”) did.  On appeal, the Montana Supreme Court considered whether the lower court erred when it invalidated the 1993 rule, reinstated the 1987 rule, and directed the DNRC to initiate a new rulemaking.

The Court broke the first question into two parts: whether the rule was inconsistent with the plain language of the statute and whether the legislature’s subsequent amendments adopted the interpretation of the 1993 rule.  The Court explained that, when deciding if a rule is inconsistent with statutory language, it must first ascertain the plain language meaning of the statute.  If a statute does not have a plain language meaning, then it is ambiguous.  Once the Court determines whether there is a plan language meaning, it will determine whether a rule is inconsistent or in conflict with the statute.  If it determines there is an inconsistency or conflict, then the rule is invalid.  The Court explained that an agency’s “subsequent inconsistent rules” do not create ambiguity in a statutory terms.  Then the Court explained that statutory amendments do not change the intent of unchanged language.

Applying these rules, the Court examined the plain language meaning of “combined appropriation” using dictionary definitions and grammar rules.  First, it explained that “appropriation” refers to a quantity of water removed.  Second, the Court explained that because “combined” precedes “appropriation,” “combined appropriation” means a combined quantity of water, not a physically combined groundwater development.  This placement does not allow “combined” to modify anything but “appropriation.”  Because the term refers to quantity, and not method of removal, the Court determined that the 1993 rule “effectively swallow[s] up the underlying exception” because it limits the exception to structurally combined appropriations by enabling groundwater appropriators to pump beyond the statutory limit as long as they did not physically combine their pumping systems.  This contradicts the intent of the legislature because it allows combined appropriations of a greater quantity than authorized by statute.  The Court went on to explain that the legislature’s amendments, which continually lowered the quantity allowed for exempt ground developments but left the combined appropriation language untouched, did not adopt the 1993 rule interpretation of the term because it did not modify the combined appropriation language.  Therefore, the intent of the combined appropriation language remained the same, consistent with the plain meaning of the original words and unchanged by the 1993 rule’s interpretation.  The Court rejected DNRC’s 1993 rule.

The second question, whether the lower court erred by reinstating the 1987 rule, appeared to the Court as a question of first impression.  The Court first looked to federal Administrative Procedure Act (“APA”) case law that replaced an invalidated rule with the previous valid rule.  Then it compared this approach to the similar approach for invalidated statutes and looked through the Montana APA for potential inconsistencies. Finding no inconsistencies, the Court adopted the federal approach to invalidated rules and held that lower court did not err by reinstating the 1987 rule.

Finally, the Court considered the Well Driller’s argument that the lower court could not require the DNRC to initiate rulemaking consistent with the order.  The Court reasoned that, because courts have the authority to “pronounce a judgment and carry it into effect,” the lower court could require rulemaking to be consistent with its order.  However, the Court agreed that the District Court could not compel DNRC to initiate a new rulemaking.  Because it is the DNRC’s responsibility to adopt necessary rules, it is the DNRC’s decision whether or not to keep the reinstated 1987 rule.

Accordingly, the Court partially affirmed the lower court’s decision invalidating the 1993 rule.

Justice Jim Rice, dissenting.

Justice Rice dissented.  He did not find the plain language of the statute “clear on its face.” He found it strange that the Court’s ruling implied that the “DNRC inexplicably misinterpreted and misapplied a clear statute for the past 23 years.”  Rather, he thought the Court found the significant increase in exempt appropriations startling and acted as a legislative body to correct a perceived policy failing.

             N. Rioux Jordan

Image: The Clark Fork River, which runs through Montana. Flickr User Micah Sheldon, Creative Commons.