Senate committee hears competing views on bill to require land board sign-off before state lawyers claim private water rights

At a Senate Natural Resources Committee hearing, Sen. Becky Beard introduced Senate Bill 263, saying the measure would “ensure transparency and accountability when the state attempts to claim private … water rights.” The bill would require the Department of Natural Resources and Conservation (DNRC) to seek Montana State Land Board approval and notify affected lessees before attorneys assert ownership of private water rights used temporarily on state trust leases.

Sen. Becky Beard, sponsor of SB 263, told the committee the bill “simply codifies” a May 2024 land board motion and “guarantees basic due process for private water rights owners,” including notice and an opportunity to appear before the land board before any legal action is taken. The bill also adds the phrase “water rights” to a statute listing improvements a lessee may place on state land and would allow a lessee to remove certain stock‑water improvements placed by the lessee on state land during a lease term.

Proponents — primarily ranchers, water‑rights attorneys and drilling operators — told the committee they back SB 263 as a transparency and property‑rights protection measure. Colleen Coyle, a water‑rights attorney, summarized the bill’s changes to Montana Code and said the measure requires DNRC to bring ownership claims before the land board and to provide a list of water rights it has obtained from lessees. Ranchers argued that private parties invest money and labor to develop wells and other water improvements, and that state assertion of ownership without notice has harmed those who use state leases.

Opponents, including officials aligned with the governor and several ag groups, said the bill goes beyond the land board motion and could conflict with the land board’s constitutionally mandated fiduciary duty to school trust beneficiaries. Lieutenant Governor Kristen Juras, appearing for Gov. Greg Gianforte, told committee members that the land board has a “strict fiduciary duty” to protect trust lands and said the bill “goes much farther, unfairly impairing the fiduciary duties of the land board.” Juras also said House Bill 286 (2019) addressed many past problems and reported the state has removed its name from more than 140 post‑1973 water rights that had been asserted improperly.

Other opponents, including Rayleigh Honeycutt of the Montana Stock Growers Association and Brian Thompson of the Senior Water Rights Coalition, urged changes so the bill would not preclude the land board from asserting ownership claims where appropriate, and warned SB 263 could improperly assign a quasi‑judicial role to the land board rather than leaving ownership disputes to the water‑court adjudication process.

Committee members asked technical and constitutional questions: several senators pressed whether the bill would prevent the land board from taking actions required by its fiduciary duty, how the bill would affect pre‑1973 versus post‑1973 water rights, and whether affected property owners should be allowed to appear on the land board agenda rather than only during public comment. Lieutenant Governor Juras said an amendment that codifies the May 2024 land board motion would be acceptable, but she warned the bill as written could be unconstitutional because it would limit the land board’s ability to assert ownership when required under the constitution.

SB 263 explicitly requires department notice to lessees and a process for lessees to appear before the land board; the draft that committee members discussed includes a 180‑day notice period before the DNRC attempts to obtain ownership of a water right. Supporters said the change would bring transparency after a period when DNRC added the state’s name to water rights without timely land board review; opponents said much of that problem has been fixed by HB 286 and that judicial adjudication processes must be preserved for determining ownership.

No committee vote was recorded at the hearing. Sen. Beard asked the committee to “do pass” the bill; committee members and administration representatives said parties were discussing possible amendments to narrow the bill and address constitutional and statutory concerns. The committee chair closed the hearing without taking a formal vote.

The bill’s next steps were not taken at the hearing; committee members indicated they may consider amendments to align SB 263 more closely with the land board’s May 2024 motion and to clarify the bill’s interaction with existing law and water‑court adjudication.