Montana interim committee hears heated testimony on draft grandfathering bill for exempt wells

Miss Heneman, staff to the Montana Water Policy Interim Committee, introduced a provisional draft bill intended to ‘grandfather’ certain property owners whose subdivisions received DNRC determination letters and DEQ subdivision approvals during a specified period and who now say they cannot obtain certificates of water right after a 2024 court decision.

The draft would allow owners of affected tracts of record to file a notice of completion and preserve an exempt‑well entitlement if the parcel received a DEQ certificate of subdivision approval and a DNRC determination (the predetermination letter) during the window the draft lists. The staff draft initially proposed a deadline for filing a notice of completion (the draft used January 1, 2032) and specified that the permitted volume and purpose of use could not be expanded beyond what was identified in the DNRC determination letter.

The bill prompted extensive public testimony from homeowners, developers and attorneys. Many homeowners said they and their families purchased homes in good faith after following DNRC and DEQ guidance during subdivision approval and now face inability to refinance or sell properties because lenders and title companies flag unresolved water‑right status. ‘‘We need our exempt well grandfathered in,’’ said Daniella Bowen, a Helena homeowner who asked the committee to keep the measure standalone and narrow so affected families are not lost in broader policy negotiations.

Developers said they followed DNRC procedures and engineering advice at the time of development. ‘‘We followed the guidance we were given,’’ said developer Steve Utick, noting DNRC staff previously recommended phasing subdivisions and using exempt‑well allowances because the water‑transfer path could otherwise take years. Developers urged clarity that landowners who relied on agency determinations should not be penalized.

Attorneys who represent affected homeowners and developers pressed the committee to narrow the draft and to avoid retroactive limits that might impair vested rights. Peter Scott, counsel for several plaintiffs, said the draft as written risked an impermissible retroactive change if it attached new filing deadlines or discretionary language to existing recorded entitlements. ‘‘Take the dates out and make the bill say that qualified tracts shall be grandfathered,’’ Scott told the committee, recommending statutory language that tied eligibility to having both a certificate of subdivision approval (COSA) and a DNRC determination letter, rather than to a specific date range.

Committee members probed legal risk and policy tradeoffs. Several lawmakers favored a limited time window to bring certainty to affected homeowners, while others worried a deadline could be legally challenged as impairing vested expectations. Staff said DNRC and DEQ did not have a simple public list of all affected subdivisions and that the precise universe of parcels remains to be verified.

The committee did not vote on the draft at this meeting. Members directed staff to work with attorneys and stakeholders to refine options (remove or rethink hard date cutoffs, consider converting discretionary language to mandatory ‘shall’ provisions for clearly qualifying parcels, and preserve a narrow scope) and to return with revised language and information on the set of affected properties at a future meeting.

Next steps: staff will collect a verified list of subdivisions/parcels potentially affected and draft alternate language that addresses legal concerns about retroactivity and scope. The interim committee indicated interest in a standalone grandfathering measure rather than folding the change into a larger exempt‑well package.

(Reporting from hearing segments beginning with the committee bill review and extensive public comment.)