Committee hears renewables loan package tied to coal-severance bonds; regional water systems, irrigation districts seek reauthorization

Helena — House Subcommittee F opened testimony on House Bill 8, a bill that would authorize the issuance of coal-severance tax bonds to finance renewable resource loans for irrigation and regional water projects.

The bill "requests the legislature's approval to issue up to" bond proceeds for renewable-resource loans, Autumn Coleman, deputy administrator for the Department of Natural Resources and Conservation, told the committee. Coleman said the request includes loans for new projects and reauthorization of prior loan authority.

Why it matters: House Bill 8 is the financing vehicle the department says is needed to provide low-interest loans for public irrigation projects and to supply the non‑federal match for several regional water systems that have received or are seeking Bureau of Reclamation funding. Because the bill would pledge coal-severance tax bond proceeds, DNRC and LFD witnesses emphasized a heightened constitutional vote threshold: coal-severance-backed debt requires a larger legislative majority under Montana law.

Key details and funding cited in testimony

- LFD budget analyst Paula Thomas summarized the agency analysis and numbers in the committee binder, saying the legislature's executive budget proposal and DNRC material show a total RRGL (Renewable Resource Grant and Loan) appropriation of roughly $146.2 million for the 2027 biennium across grants and loans. Thomas said the RRGL loan component in the executive budget increased compared with the prior biennium and that DNRC submitted a revised proposal the department expects will improve the projected fund balance.

- Thomas told the committee that under the bill the Board of Examiners would be authorized to issue coal-severance tax bonds "in an amount not to exceed $121,198,444 in the biennium beginning 07/01/2025," and that $12,119,844 of that would establish a reserve for the bonds.

- DNRC deputy administrator Autumn Coleman described loan eligibility: public entities may apply, loans are repaid by the borrowers, and proceeds come from coal-severance-tax-secured bond sales. She said loans are offered at subsidized interest rates and that applicants must demonstrate public and renewable-resource benefits plus an ability to repay.

Project proponents: regional water systems and irrigation districts

Several regional water authorities and irrigation districts presented project testimony in support of loan reauthorizations or new loan authority in House Bill 8 (and related bills such as House Bill 11, which addresses regional water projects). Highlights from proponents' testimony:

- Dry Prairie Rural Water Authority (Joni Sherman, general manager): Sherman told the committee the Fort Peck–Dry Prairie Regional Water System will serve more than 31,000 people and about 1,700 rural services in Roosevelt, Sheridan, Daniels and Valley counties; the system is funded about 76% federal and 24% non‑federal (state/local loans, grants, user fees). She said Dry Prairie has expended $36.8 million of state and local share to date but remains roughly $10 million short of the federally authorized non‑federal match and asked for reauthorization so the district can avoid interim borrowing while federal funds were delayed earlier in the program.

- North Central Montana Regional Water Authority (Eric Minetti): Minetti said the authority has completed multiple interim systems and is helping construct a treatment plant at Tiber Reservoir that, when completed, is expected to serve Rocky Boy Reservation and North Central communities. Completion of the Tiber treatment plant is expected in 2027, he said, and the system hopes to receive Tiber water after pipeline segments are finished.

- Central Montana Regional Water Authority (David Picchione, vice chairman): Picchione said the authority has pipe in the ground from its Judith Gap well field to Harlowton and expects Roundup to be online within months. He requested $600,000 for Phase 3 and $2.3 million for Phase 3A to finish routes to Lavina/Broadview and Shawmut/Dead Man's Basin, and described local economic benefits and community support.

- Dry Redwater Regional Water Authority (representative): Dry Redwater described ongoing feasibility work with the Bureau of Reclamation, interim connections using the City of Sidney water system and the need for state bonding in House Bill 11 and loan authority in House Bill 8 to secure federal matching funds for construction.

Irrigation district projects

Multiple irrigation districts asked for loan reauthorization or new loans tied to specific rehabilitation projects:

- Zurich Irrigation (Dean Baker, chair): requested loan support to rehabilitate a failing siphon structure on the main supply canal, stressing that failing cement will threaten irrigated acres and farm revenue; the district serves about 10,500 irrigated acres.

- Kinsey Irrigation (Doug Martin, manager): described two projects — the Hammerbacher lateral pipeline conversion (to reduce seepage) and the Harris Creek spill rehabilitation (to protect the spill from ongoing erosion). Martin said Kinsey supports farm production that feeds roughly 30,000 head of cattle each winter and asked for state assistance.

- Greenfields Irrigation District (Chase Brady, commissioner): requested reauthorization of a $1.5 million loan for replacement of a 35-foot drop structure; the replacement includes seasonal hydropower generation expected to produce about 7,200 MWh per season and roughly $300,000 per year in revenue for the district.

- Hammond Irrigation District (Chad Riesland, project engineer): testified on the Big Porcupine Creek siphon rehabilitation; DNRC and the district identified seepage and a leaking pipe that wastes water (estimated equivalent to irrigating about 100 acres) and asked that construction be eligible for loan support, supplemented by ARPA funds already used for design and permitting.

- Fort Shaw Irrigation District (Todd Click): described an aging, 1,575-foot siphon poured in 1908. Click said the structure is leaking and losing more than 1,200 acre‑feet annually and that the district has invested in temporary repairs; the district seeks loan authority to replace the siphon before a catastrophic failure occurs.

State dam projects in the RRGL/loan context

- DNRC representatives also described two DNRC-owned dam rehabilitation loan applications included in HB8: Painted Rocks Dam (phase 1 loan request about $15 million toward an overall estimated $50 million rehabilitation) and Willow Creek Dam (a $20 million overall project; feasibility work and RDG grants were discussed). DNRC said both dams are classified as high-hazard structures and that Willow Creek rehabilitation is intended to restore safe performance and extend life by decades.

Funding mechanics, statutory and procedural context

- LFD analyst Paula Thomas summarized fund sources for the Natural Resources Project Fund, including Resource Indemnity Trust earnings, groundwater assessment taxes, and oil and gas production tax projections, and cautioned that the governor's original recommendation would have left the fund with a negative ending balance; she said DNRC will present a revised appropriation set intended to restore a positive ending balance.

- Thomas and Coleman reminded the committee of the constitutional and statutory vote thresholds for pledging coal-severance-backed debt: coal-severance tax bond authority requires a supermajority (three-fourths as described by one LFD slide) and the creation of state debt under the constitution requires a two-thirds vote of both houses. Committee staff and DNRC framed the bill as authorizing bond issuance and loan reauthorization; actual loan approvals would still require DNRC underwriting and borrower demonstrations of repayment ability.

What the committee did

No formal votes were taken during the hearing. Committee members asked technical and timeline questions of project proponents and DNRC staff, and the subcommittee recessed to continue other agenda items and to hear related bills on subsequent days.

Ending

Chair Fitzpatrick closed testimony on House Bill 8 after a full day of witnesses and asked members to return for hearings on House Bill 6 and House Bill 7 on subsequent days.

Speakers quoted in this article are listed in the accompanying speaker list submitted with this report.