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City of Helena v. Community of Rimini

Supreme Court of Montana

June 13, 2017

City of Helena, Claimant, Appellee and Cross-Appellant,
v.
Community of Rimini, Objector and Appellee, Andy R. Skinner, Objector and Appellant.

          Submitted on Briefs: January 25, 2017

         APPEAL FROM: Montana Water Court, Cause No. 41I-67 Honorable Loren Tucker, Water Judge

          For Appellant: John E. Bloomquist, Bloomquist Law Firm P.C., Helena, Montana.

          For Appellee City of Helena: Thomas Jodoin, Helena City Attorney, Helena, Montana Candace C. Payne, Luxan & Murfitt, PLLP, Helena, Montana Christian D. Tweeten, Attorney at Law, Missoula, Montana.

          For Appellee City of Rimini: Holly Jo Franz, Franz & Driscoll, PLLP, Helena, Montana.

          OPINION

          MICHAEL E WHEAT, JUSTICE

         ¶1 Andy R. Skinner (Skinner) appeals and the City of Helena (Helena or City) cross-appeals from the order of the Montana Water Court, Upper Missouri Division, partially reversing and partially adopting the Water Master's Report.

         ¶2 We restate the issues on appeal and cross-appeal as follows:

Issue One: Is § 85-2-227(4), MCA, as applied to the City's water rights claim, impermissibly retroactive?
Issue Two: Did the Water Court err in reinstating 7.35 cfs of Helena's Tenmile Creek water rights?
A. Did the Water Court err in finding that § 85-2-227(4), MCA, should be applied to create a presumption of nonabandonment for the City?
B. Did the Water Court correctly reject the Master's finding that Skinner had rebutted the presumption of nonabandonment?
Issue Three: Did the Water Court err in finding that the City had abandoned 0.60 cfs of its Tenmile Creek water rights?
Issue Four: Did the Water Court err in imposing specific place of use restrictions on Helena's decreed Tenmile Creek water rights?

         We affirm in part and reverse in part.

         FACTUAL AND PROCEDURAL BACKGROUND

         ¶3 This controversy involves two water rights claims filed by the City for the waters of Tenmile Creek, a stream located in the mountains southwest of Helena, Montana.[1] Rising on the Continental Divide, the creek flows north between Red Mountain and Lee Mountain, before passing through the old mining community of Rimini, Montana. Upon reaching U.S. Highway 12, the stream turns east towards Helena and flows northeast, just beyond the City's northwest boundary.

         ¶4 In the mid-1800's, miners appropriated water from the stream for use in their mining operations. By 1886, the mines had become depleted and some of the miners sold their water rights to the Helena Water Works Company (Company). In 1903, a decree entitled Whitcomb v. Helena Water Works (Decree)[2] declared the Company to be the owner of the first two rights on the stream. The first right had a priority date of November 5, 1864, and entitled the Company to an appropriation of 225 miner's inches (MI) (claim number 41I 89074-00). The second right had a priority date of February 10, 1865, and entitled the Company to an appropriation of 325 MI (claim number 41I 890745-00). Taken together, the two rights to the stream total 550 MI, or 13.75 cubic feet per second (cfs).

         ¶5 At the time of the Decree, the Company used two points of diversion for the stream. The first point diverted 225 MI through an open ditch, running near Rimini, into a water treatment facility, and then into Helena through two sixteen-inch pipelines. The precise date of the pipeline's construction is unknown, but is thought to be around 1903. The second point diverted 325 MI four miles downstream from the treatment facility through an open channel known as the "Yaw Yaw" ditch. The City acquired the Company's facility and water rights in 1911. In 1919, the City ceased using the Yaw Yaw ditch for municipal purposes, but continued to lease the water for agricultural use and maintain the facilities for emergency purposes.

         ¶6 In 1921, the City replaced the open ditch running near Rimini with an eighteen-inch concrete diversion pipeline known as the "Rimini Pipeline, " and added five new points of diversion along Tenmile Creek. After the City ceased using the Yaw Yaw ditch for municipal purposes, all of the creek's diversions flowed through the Rimini Pipeline. The pipeline has a capacity of 13.15 cfs, 0.60 cfs less than the combined total of Helena's two Tenmile Creek water rights.

         ¶7 The City continued to rely on the two sixteen-inch pipelines to deliver water from the treatment facility to Helena. By 1929, the City had identified the two sixteen-inch pipelines as the limiting factor in the Tenmile system; specifically, an engineering report from that year found that leakage, waste, and other factors restricted the capacity of the pipelines to 5.50 cfs. The report recommended construction of a new transmission pipeline. In 1948, the City installed a new twenty-four-inch pipeline. The pipeline enabled the City to transmit 13.15 cfs from the Rimini Pipeline, but has a capacity of 13.75 cfs.

         ¶8 Skinner owns junior water rights on Tenmile Creek. Both Skinner and the Community of Rimini objected to Helena's Tenmile Creek water right claims and the subsequent procedural background concerning the Water Court's adjudication of the City's claims spans two decades. In a report filed July 28, 2011, and a supplemental report filed January 13, 2012, Water Master Hugh B. McFadden, Jr. (the Master) found that the City abandoned 7.35 cfs of its water rights to Tenmile Creek and imposed specific place of use restrictions on the City's water rights. On November 8, 2013, Water Judge Ted L. Mizner held that the Master erred in failing to apply Montana's presumption of municipal nonabandonment statute, [3] and restored the full decreed right of 13.75 cfs to the City. Judge Mizner also adopted the Master's place of use finding. Skinner appealed to the Montana Supreme Court and, on February 24, 2015, this Court remanded the case for further proceedings due to procedural errors and ambiguities in the Water Court's order.

         ¶9 On remand, Water Judge Loren Tucker adopted the Master's finding that the City had abandoned 7.35 cfs of its water rights claims under the common law. However, the Water Court then ordered the parties to brief whether the City may avoid abandonment under § 85-2-227(4), MCA, including whether the statute is constitutional.[4] On April 29, 2016, the court found that: 1) under § 85-2-227(4), MCA, the "evidence established a presumption that the City did not intend to abandon 7.35 cfs, " which Skinner failed to rebut; and 2) the City abandoned 0.60 cfs in the Rimini Pipeline, the difference between the 13.15 cfs capacity of the pipeline and 13.75 cfs, the capacity decreed.

         ¶10 Skinner now appeals, and the City cross-appeals, the Water Court's order. Additional facts will be provided as necessary to dispose of the issues raised.

         STANDARDS OF REVIEW

         ¶11 In a case involving both a water master and the water court, two standards of review are applicable: the standard the water judge applies to the master's report and the standard we apply to the water court's opinion. Skelton Ranch, Inc. v. Pondera Cnty. Canal & Reservoir Co., 2014 MT 167, ¶ 25, 375 Mont. 327, 328 P.3d 644. The water court reviews the master's findings of fact for clear error and the master's conclusions of law to determine whether they are correct. Skelton Ranch, ¶ 25. Applying these standards of review, the water judge may adopt, modify, or reject the master's report, in whole or in part, or may receive further evidence or recommit it with instructions. Skelton Ranch, ¶ 5.

         ¶12 We review the water court's order de novo, to determine whether it correctly applied the clear error standard of review to the master's findings of fact and whether its conclusions of law were correct. Skelton Ranch, ¶ 26. Whether the standard of review was applied correctly is a question of law. Skelton Ranch, ¶ 26. We review the water court's findings to determine whether they are clearly erroneous. Skelton Ranch, ¶ 26.

         ¶13 Clear error can be found by one of three ways:

A factual finding may be clearly erroneous if it is not supported by substantial evidence. Even if supported by substantial evidence, the finding may be clearly erroneous if the trier of fact misapprehended the effect of the evidence. Even if supported by substantial evidence and the effect of the evidence is not misapprehended, a finding may be clearly erroneous if, in light of the evidence as a whole, the reviewing court is left with a definite and firm conviction that a mistake has been made.

In re Eldorado Coop Canal Co., 2016 MT 94, ¶ 17, 383 Mont. 205, 369 P.3d 1034 (citing Marks v. 71 Ranch, LP, 2014 MT 250, ¶ 12, 376 Mont. 340, 334 P.3d 373). Substantial evidence is evidence that a "reasonable mind might accept as adequate to support a conclusion, even if the evidence is weak or conflicting." Skelton Ranch, ¶ 27. To find substantial evidence there must be more than a scintilla of evidence but a preponderance of the evidence is not required. This standard is deferential, and not synonymous with the clear error standard. A reviewing court may still find a factual finding is clearly erroneous even though there is evidence to support it. Skelton Ranch, ¶ 27.

         DISCUSSION

         ¶14 Issue One: Is § 85-2-227(4), MCA, as applied to the City's water rights claim, impermissibly retroactive?

         ¶15 The City of Helena first argues that Skinner's appeal should be dismissed because he failed to comply with M. R. Civ. P. 5.1 and M. R. App. P. 27, [5] requiring that he notify the Attorney General of his constitutional challenge of § 85-2-227(4), MCA. Skinner contends that he is not challenging the constitutionality of § 85-2-227(4), MCA, and, as such, the procedural notice requirements do not apply in this case. Specifically, Skinner argues that since § 85-2-227(4), MCA, does not contain a retroactivity clause as required by § 1-2-109, MCA, it cannot be retroactively applied to him.

         ¶16 In 2005, the Montana Legislature amended § 85-2-227(4), MCA, to create a presumption of nonabandonment for all water rights claimed for municipal use. As amended, § 85-2-227(4), MCA, now reads:

(4) In a determination of abandonment made under subsection (3), the legislature finds that a water right that is claimed for municipal use by a city, town, or other public or private entity that operates a public water supply system, as defined in 75-6-102, is presumed to not be abandoned if the city, town, or other private or public entity has used any part of the water right or municipal water supply and there is admissible evidence that the city, town, or other public or private entity also has:
(a) obtained a filtration waiver under the federal Safe Drinking Water Act, 42 U.S.C. 300(f), et seq.;
(b) acquired, constructed, or regularly maintained diversion or conveyance structures for the future municipal use of the water right;
(c) conducted a formal study, prepared by a registered professional engineer or qualified consulting firm, that includes a specific assessment that using the water right for municipal supply is feasible and that the amount of the ...

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