Montana Sued Over Law That Allows Water Wells for Low-Density, Rural Subdivisions Without Permits
A broad coalition is suing the state of Montana over its interpretation of a decades-old law that housing developers have long relied on to supply water to low-density residential subdivisions outside public water supplies.At the center of the conflict are “exempt wells,” which earned that moniker shortly after Montana legislators passed a law in 1973 allowing just about anyone to drill a well and pump up to 10 acre-feet of groundwater from it per year without first demonstrating that nearby water users won’t see a decrease in their water supplies. An acre-foot of water is enough to serve two to three households for a year.According to a lawsuit filed Wednesday, approximately 141,000 wells have been drilled using the exempt well law since 1973. More than two-thirds of those wells were drilled to supply homes with drinking water or to water lawns or gardens.The six nonprofit groups and three individual water users argue that the Montana Department of Natural Resources and Conservation, which administers water rights, has authorized “unregulated groundwater development.” Reliable water supplies for those with the oldest water rights and “the integrity of Montana’s water resources” are at stake, the plaintiffs contend.The plaintiffs are asking the Lewis and Clark County District Court to block the state from continuing its “unabated” authorization of exempt wells, which have become developers’ preferred tool to facilitate development on large, rural lots. According to the lawsuit’s analysis of data compiled by Headwaters Economics, more than half of the residential development that happened in Montana between 2000 and 2021 occurred outside of incorporated municipalities.Efforts to revise the exempt well statute have fueled a series of “knock-down, drag-out” fights at the Montana Capitol, including a heated debate earlier this year on a proposal developed by a working group convened by the Department of Natural Resources and Conservation that hit an insurmountable groundswell of opposition before it could clear its first chamber.Housing developers argue the existing loophole offers builders a faster alternative to the state’s lengthy and uncertain permitting process. Developers and other permitting reform advocates say a smoother regulatory process to access what they deem is a small amount of water increases the pace and scale of construction, thereby easing Montana’s housing supply and affordability strains in a state where housing costs have skyrocketed. Opponents counter that hundreds of billions of gallons of water have been unconstitutionally appropriated using exempt wells, and the proliferation of new straws into Montana’s aquifers, paired with the septic systems that frequently accompany them, are drawing down critical water supplies and overloading them with nutrient pollution.The Montana League of Cities and Towns, which represents municipalities that rely on surface water or underground aquifers to meet the needs of homes and businesses served by public water supplies, is the lead plaintiff in the litigation. Other parties to the lawsuit include the Association of Gallatin Agricultural Irrigators, the Montana Farm Bureau Federation, Clark Fork Coalition, Montana Environmental Information Center and Trout Unlimited.In an emailed statement about the lawsuit, Clark Fork Coalition legal director Andrew Gorder argued that the state needs to change its permitting practices to uphold the 1972 Montana Constitution, which “recognized and confirmed” all of the “existing rights to the use of any waters.”“From rapid growth to ongoing drought, Montana’s water resources and water users are facing unprecedented challenges,” Gorder wrote. “The cumulative impact of over one hundred thousand exempt groundwater wells can no longer be ignored. We’re asking the court to conserve our limited water resources and ensure that the constitutional protections afforded to senior water rights, including instream flow rights, are preserved.”Montana Fish, Wildlife and Parks, along with groups like Clark Fork Coalition and Trout Unlimited, hold or lease instream flow rights to sustain sensitive fisheries during periods of drought like the ongoing one dropping many western Montana rivers to record-low levels.Plaintiff Kevin Chandler, a hydrogeologist who ranches outside of Absarokee, juxtaposed the process he and his wife, Katrin, went through to obtain and protect the water they use on their ranch with the process afforded to nearby developers of the 67-lot Crow Chief Meadows subdivision.“We did everything the law asked of us to protect our water and our neighbors’ water – collecting data, hiring experts, and working hand-in-hand with the state,” Chandler wrote in the statement. “It’s frustrating to see a subdivision using dozens of exempt wells get approved, when the same development proposing a single shared community well would have been denied. Those community systems are more efficient and safer, and their use can be measured and monitored. The current policy promotes poorly planned development and passes the hidden costs to future homeowners, counties and towns.”A spokesperson for the DNRC declined to comment on the lawsuit.The lawsuit presents four claims for relief, beginning with recognizing the constitutional protections afforded to senior water users and concluding with a constitutional provision protecting Montanans’ right to know what their government is doing and their right to participate in the operation of its agencies. The plaintiffs note that an interim legislative committee has been tasked with digging into the exempt well statute once again. But they don’t appear optimistic that the Legislature will reach a different result when it next convenes in 2027. Despite nearly two decades of studies identifying the consequences of exempt well development and repeated efforts to revise state laws, no meaningful change has occurred, according to the lawsuit.Four of the lawsuit’s plaintiffs — the Montana League of Cities and Towns, Clark Fork Coalition, Montana Farm Bureau Federation and Trout Unlimited — participated in the group that developed Senate Bill 358, which sought to close some of the state’s fastest-growing valleys to additional exempt wells but allow for increased groundwater development across the rest of the state as part of a compromise package. In April, the Montana Senate overwhelmingly rejected the measure.Kelly Lynch, executive director of the Montana League of Cities and Towns, said SB 358’s failure spurred her organization’s decision to move forward with the lawsuit.“We put our hearts and souls into that bill,” she said. “The fact that it failed — it was like, ‘OK, it’s time.’”Lynch added that other Western states have experienced similar pressures on their groundwater supplies and have responded by narrowing the groundwater withdrawal loophole. In those states, she said, the exempt well law is “extremely limited to those situations in which an exemption is truly necessary — not a development pattern that is subsidized by the exemption.”In that lawsuit, District Court Judge Michael McMahon sided with Upper Missouri Waterkeeper and a handful of landowners opposed to the 442-acre Horse Creek Hills subdivision. In his 2024 ruling, McMahon chastised the Department of Natural Resources and Conservation for “torturously misreading its own rules and ignoring Supreme Court precedent” on the cumulative impacts of exempt wells.Asked to respond to this round of litigation, Upper Missouri Waterkeeper Executive Director Guy Alsentzer wrote in an email to Montana Free Press that it’s an encouraging development that builds on the Horse Creek Hills litigation.“The pressure to develop land is unrelenting, and recent history demonstrates the Montana Legislature is plainly incapable of a constitutionally-sound approach to adequately regulating Montana’s water resources,” Alsentzer wrote. “Ideally, this case finishes the battle at-stake in Upper Missouri Waterkeeper v. Broadwater County (aka Horse Creek Hills), and before that in Clark Fork Coalition v. Tubbs: there is no free water for sprawl subdivision development in closed Montana river basins.”This story was originally published by Montana Free Press and distributed through a partnership with The Associated Press.Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.Photos You Should See – Oct. 2025
A coalition of cities, agricultural interests and environmental groups is suing Montana over a decades-old law that housing developers have relied on to supply water to low-density residential subdivisions not connected to public water supplies
A broad coalition is suing the state of Montana over its interpretation of a decades-old law that housing developers have long relied on to supply water to low-density residential subdivisions outside public water supplies.
At the center of the conflict are “exempt wells,” which earned that moniker shortly after Montana legislators passed a law in 1973 allowing just about anyone to drill a well and pump up to 10 acre-feet of groundwater from it per year without first demonstrating that nearby water users won’t see a decrease in their water supplies. An acre-foot of water is enough to serve two to three households for a year.
According to a lawsuit filed Wednesday, approximately 141,000 wells have been drilled using the exempt well law since 1973. More than two-thirds of those wells were drilled to supply homes with drinking water or to water lawns or gardens.
The six nonprofit groups and three individual water users argue that the Montana Department of Natural Resources and Conservation, which administers water rights, has authorized “unregulated groundwater development.” Reliable water supplies for those with the oldest water rights and “the integrity of Montana’s water resources” are at stake, the plaintiffs contend.
The plaintiffs are asking the Lewis and Clark County District Court to block the state from continuing its “unabated” authorization of exempt wells, which have become developers’ preferred tool to facilitate development on large, rural lots. According to the lawsuit’s analysis of data compiled by Headwaters Economics, more than half of the residential development that happened in Montana between 2000 and 2021 occurred outside of incorporated municipalities.
Efforts to revise the exempt well statute have fueled a series of “knock-down, drag-out” fights at the Montana Capitol, including a heated debate earlier this year on a proposal developed by a working group convened by the Department of Natural Resources and Conservation that hit an insurmountable groundswell of opposition before it could clear its first chamber.
Housing developers argue the existing loophole offers builders a faster alternative to the state’s lengthy and uncertain permitting process. Developers and other permitting reform advocates say a smoother regulatory process to access what they deem is a small amount of water increases the pace and scale of construction, thereby easing Montana’s housing supply and affordability strains in a state where housing costs have skyrocketed.
Opponents counter that hundreds of billions of gallons of water have been unconstitutionally appropriated using exempt wells, and the proliferation of new straws into Montana’s aquifers, paired with the septic systems that frequently accompany them, are drawing down critical water supplies and overloading them with nutrient pollution.
The Montana League of Cities and Towns, which represents municipalities that rely on surface water or underground aquifers to meet the needs of homes and businesses served by public water supplies, is the lead plaintiff in the litigation. Other parties to the lawsuit include the Association of Gallatin Agricultural Irrigators, the Montana Farm Bureau Federation, Clark Fork Coalition, Montana Environmental Information Center and Trout Unlimited.
In an emailed statement about the lawsuit, Clark Fork Coalition legal director Andrew Gorder argued that the state needs to change its permitting practices to uphold the 1972 Montana Constitution, which “recognized and confirmed” all of the “existing rights to the use of any waters.”
“From rapid growth to ongoing drought, Montana’s water resources and water users are facing unprecedented challenges,” Gorder wrote. “The cumulative impact of over one hundred thousand exempt groundwater wells can no longer be ignored. We’re asking the court to conserve our limited water resources and ensure that the constitutional protections afforded to senior water rights, including instream flow rights, are preserved.”
Montana Fish, Wildlife and Parks, along with groups like Clark Fork Coalition and Trout Unlimited, hold or lease instream flow rights to sustain sensitive fisheries during periods of drought like the ongoing one dropping many western Montana rivers to record-low levels.
Plaintiff Kevin Chandler, a hydrogeologist who ranches outside of Absarokee, juxtaposed the process he and his wife, Katrin, went through to obtain and protect the water they use on their ranch with the process afforded to nearby developers of the 67-lot Crow Chief Meadows subdivision.
“We did everything the law asked of us to protect our water and our neighbors’ water – collecting data, hiring experts, and working hand-in-hand with the state,” Chandler wrote in the statement. “It’s frustrating to see a subdivision using dozens of exempt wells get approved, when the same development proposing a single shared community well would have been denied. Those community systems are more efficient and safer, and their use can be measured and monitored. The current policy promotes poorly planned development and passes the hidden costs to future homeowners, counties and towns.”
A spokesperson for the DNRC declined to comment on the lawsuit.
The lawsuit presents four claims for relief, beginning with recognizing the constitutional protections afforded to senior water users and concluding with a constitutional provision protecting Montanans’ right to know what their government is doing and their right to participate in the operation of its agencies.
The plaintiffs note that an interim legislative committee has been tasked with digging into the exempt well statute once again. But they don’t appear optimistic that the Legislature will reach a different result when it next convenes in 2027. Despite nearly two decades of studies identifying the consequences of exempt well development and repeated efforts to revise state laws, no meaningful change has occurred, according to the lawsuit.
Four of the lawsuit’s plaintiffs — the Montana League of Cities and Towns, Clark Fork Coalition, Montana Farm Bureau Federation and Trout Unlimited — participated in the group that developed Senate Bill 358, which sought to close some of the state’s fastest-growing valleys to additional exempt wells but allow for increased groundwater development across the rest of the state as part of a compromise package. In April, the Montana Senate overwhelmingly rejected the measure.
Kelly Lynch, executive director of the Montana League of Cities and Towns, said SB 358’s failure spurred her organization’s decision to move forward with the lawsuit.
“We put our hearts and souls into that bill,” she said. “The fact that it failed — it was like, ‘OK, it’s time.’”
Lynch added that other Western states have experienced similar pressures on their groundwater supplies and have responded by narrowing the groundwater withdrawal loophole. In those states, she said, the exempt well law is “extremely limited to those situations in which an exemption is truly necessary — not a development pattern that is subsidized by the exemption.”
In that lawsuit, District Court Judge Michael McMahon sided with Upper Missouri Waterkeeper and a handful of landowners opposed to the 442-acre Horse Creek Hills subdivision. In his 2024 ruling, McMahon chastised the Department of Natural Resources and Conservation for “torturously misreading its own rules and ignoring Supreme Court precedent” on the cumulative impacts of exempt wells.
Asked to respond to this round of litigation, Upper Missouri Waterkeeper Executive Director Guy Alsentzer wrote in an email to Montana Free Press that it’s an encouraging development that builds on the Horse Creek Hills litigation.
“The pressure to develop land is unrelenting, and recent history demonstrates the Montana Legislature is plainly incapable of a constitutionally-sound approach to adequately regulating Montana’s water resources,” Alsentzer wrote. “Ideally, this case finishes the battle at-stake in Upper Missouri Waterkeeper v. Broadwater County (aka Horse Creek Hills), and before that in Clark Fork Coalition v. Tubbs: there is no free water for sprawl subdivision development in closed Montana river basins.”
This story was originally published by Montana Free Press and distributed through a partnership with The Associated Press.
Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.