Submitted on Briefs: January 17, 2018
FROM: Montana Water Court, Case No. 41O-84 Honorable Douglas
Ritter, Water Judge.
Appellant: Holly Jo Franz, Ryan McLane, Franz & Driscoll,
PLLP, Helena, Montana.
Appellee Farmers Cooperative Canal Co.: Michael J.L. Cusick,
Moore, O'Connell & Refling, PC, Bozeman, Montana.
Appellee Teton Cooperative Canal Company: John E. Bloomquist,
Bloomquist Law Firm, P.C., Helena, Montana.
McGrath Chief Justice.
Teton Cooperative Reservoir Company (Teton Reservoir) appeals
an April 27, 2016 order of the Montana Water Court in Case
41O-84, adjudicating Teton Reservoir's water rights.
Teton Cooperative Canal Company (Teton Canal) and Farmers
Cooperative Canal Company (Farmers) cross-appeal. We affirm.
We restate the issues on appeal as follows:
Issue One: Whether the Water Court erred in determining
that Teton Reservoir's 1902 Notice of Appropriation was
Issue Two: Whether the Water Court erred by applying the
equitable doctrine of laches to Teton Reservoir's 1902
Notice of Appropriation.
Issue Three: Whether the Water Court erred in decreeing
Teton Reservoir an annual volume totaling 60, 000 acre feet
for storage in the Bynum Reservoir.
Issue Four: Whether the Water Court erred in refusing to
limit Teton Reservoir's wintertime diversions to one-half
of the available water in the Teton River.
AND PROCEDURAL BACKGROUND
Teton Reservoir is one of four irrigation companies located
on the Teton River. Teton Reservoir was incorporated in May
1906, for the purposes of acquiring, developing, and
improving the Bynum Reservoir and to complete one or more
diversion canals to take water from the Teton River to the
reservoir. Teton Reservoir has acquired four water rights.
Teton Reservoir filed a Statement of Claim for each of its
four water rights in the current water right adjudication
process for the Teton River Basin. However, the only water
right claim contested from the Water Court's Order is the
claim based on the 1902 Notice of Appropriation (1902 Notice)
filed by Donald Bradford (Bradford).
Bradford filed a Notice of Appropriation claiming 3, 000 cfs
from the Teton River on July 3, 1902. The stated purpose of
the 1902 Notice was "for the purpose of irrigating and
reclaiming lands lying in said Teton County." The 1902
Notice did not identify a reservoir. Shortly thereafter,
Bradford commissioned a survey of the project. Engineer
Walter Mathews (Mathews) performed the survey and on November
29, 1902, Mathews filed his survey report. Mathews identified
a point of diversion, a reservoir with a 69, 500 acre feet
capacity, and surveyed over twenty-nine miles of distribution
canals. Once Mathews's survey was approved by the
Government Land Office (GLO), Bradford acquired the rights of
way and tried to obtain funding for the project to develop a
canal and reservoir system.
By 1906, Bradford was unable to obtain funding to develop the
reservoir and canal system and conveyed the 1902 Notice and
the rights of way to the Wagnild group. The Wagnild group
incorporated Teton Reservoir in May 1906. Teton Reservoir
obtained the funding to develop the Bynum reservoir and canal
system (Bynum System). Between 1906 and 1909 construction on
the Bynum System progressed. In 1907, the original diversion
point was completed. In 1909, Teton Reservoir began to pursue
a potential Carey Act project to acquire more land for
irrigation. Pursuing the Carey Act project led to
internal conflict among Teton Reservoir's shareholders.
Teton Reservoir's shareholders were in direct conflict
with one another until 1914. Despite the internal conflicts,
Teton Reservoir continued to make progress on the Bynum
System. In 1910 and 1911, several engineers discovered
problems with the design and construction of the dam that
required resolving before Teton Reservoir could divert any
water. By 1915, Teton Reservoir had relocated the diversion
point because the original diversion point was in a poor
location on the river, and it had resolved the dam's
design problems. The 1962 Teton County Water Resource survey
indicated that Strabane Gage Station started diverting
floodwaters to the Bynum Reservoir in 1918.
In 1919, GLO Commissioner Tillman inspected the reservoir
site and questioned the proposed Carey Act project. The Water
Court found that the inspection marked a shift by Teton
Reservoir to return to the original plan to develop the Bynum
System and abandon the Carey Act project. Teton
Reservoir's board officially abandoned the Carey Act
project in 1925 by resolution. Due to Tillman's
inspection, local irrigators began to promote formation of
the Bynum Irrigation District (BID). In 1920, BID was
established. The BID commissioned an engineer to evaluate the
status of the Bynum System. Engineer S.B. Robbins issued his
report on November 10, 1920, providing recommendations to
improve the Bynum System so that it could divert and store
water to its fullest capacity. However, BID could not finish
the Bynum System until it received approval to sell bonds.
Between 1920 and 1925, Teton Reservoir maintained the Bynum
System. In 1925, BID received approval to sell bonds, bought
eighty percent of Teton Reservoir's stock, and began
implementing Engineer Robbin's recommendations. By 1927,
Teton Reservoir's current point of diversion, intake
canal, reservoir, and distribution canals were in place. When
completed, the Teton Reservoir's diversion canal capacity
was 1, 000 cfs and the Bynum Reservoir had a capacity between
85, 000 and 90, 000 acre feet.
During that period, Teton Canal developed limited water
storage in the Glendora Reservoir under its 1890 Notice of
Appropriation. Teton Coop. Canal Co. v. Teton Coop.
Reservoir Co., 2015 MT 344, 382 Mont. 1, 365 P.3d 442
(hereinafter Teton Canal I). In 1936, Teton Canal
expanded its water storage capacity with the development of
the Eureka Reservoir. Teton Canal again expanded the Eureka
Reservoir in 1947 and 1957. Teton Canal I, ¶
14. In 2015, this Court determined that the Eureka
Reservoir use could not relate back to Teton Canal's 1890
Notice and must be given a separate priority date. Teton
Canal I, ¶¶ 55, 57. We affirmed the Water
Court's determination that the priority date for the
Eureka Reservoir is December 7, 1936. Teton Coop. Canal
Co. v. Teton Coop. Reservoir Co., 2018 MT 20, ¶ 17,
390 Mont. 210, __P.3d__.
In 1908, the District Court issued a decree adjudicating
water rights on the upper Teton River. Perry v.
Beattie, Case No. 371 (Mont. 11th Judicial Dist., March
28, 1908) (hereinafter Perry decree). The
Perry decree adjudicated Teton Canal's
predecessors' and Farmers' predecessors' water
rights. Teton Reservoir was not a party to the Perry
decree. Significantly, Teton Reservoir never
sought to reopen the Perry decree to establish its
water rights in relation to other appropriators.
Historically, Teton Reservoir's water rights have been
administered by the water commissioner appointed by the
District Court to distribute water under the Perry
decree. In 1946, the water commissioner refused to turn water
into Teton Reservoir's ditch, and Teton Reservoir passed
a resolution instructing the directors to take steps to
clarify Teton Reservoir's water rights. However, the
Water Court found no evidence indicating that effort had been
undertaken. In 1952, the water commissioner again shut off
Teton Reservoir's water diversion to provide water to
Farmers. Teton Reservoir objected but did not file a formal
dissatisfied water user complaint. Teton Reservoir, Farmers,
and the water commissioner met with the District Court to
discuss the administration of water. In 1953, the District
Court directed the water commissioner to continue delivering
the total decreed right to Farmers before Teton Reservoir.
Teton Reservoir did not dispute the District Court's
In 2006, for the first time, Teton Reservoir filed formal
objections to Teton Canal's water right claims. The
objection asserted that the Eureka Reservoir use could not
relate back to Teton Canal's 1890 Notice. In 2009, Teton
Reservoir filed a Dissatisfied Water User Complaint in
District Court because Water Commissioner Leonard Blixrud
reduced Teton Reservoir's flow to half the available flow
in the Teton River. Teton Reservoir alleged that the water
commissioner did not have the authority to administer Teton
Reservoir's water rights as they were not part of the
Perry decree. Teton Reservoir sought injunctive
relief to restrain the water commissioner from interfering
with its diversions. On September 21, 2009, the District
Court resolved Teton Reservoir's Dissatisfied User
Complaint, finding that Teton Reservoir had voluntarily
participated in the administration of the Perry
decree for nearly forty-seven years and it was judicially
estopped from asserting otherwise.
Specifically, the District Court determined:
[Teton Reservoir] has known since the first appointment of a
water commissioner over 47 years ago, that is was not a
decreed water user under the Perry v. Beattie
decree. [Teton Reservoir] has maintained its position of
participating with the decree's administration for the
past 47 years. Water reports of [Teton Reservoir's] water
usage since 1964 have been filed in these legal proceedings;
[Teton Reservoir] has paid the water commissioner since 1964
for its water; and [Teton Reservoir] has benefited from
consistent management by a water commissioner of [Teton
Reservoir's] water for the past 47 years. . . . Lastly,
to allow [Teton Reservoir] to change its position would
disrupt the orderliness and consistency of water distribution
along the Teton River. [Teton Reservoir] is the largest off
stream reservoir on the Teton. [Teton Reservoir's]
reservoir, Bynum, has a holding capacity of 90, 000 acre feet
of water. [Teton Reservoir] seeks annually to fill Bynum to
capacity. Other storage appropriators such as Farmers'
and [Teton Canal] store water and rely on distribution of
water during the non-irrigation season as well. To allow an
unregulated upstream diversion to [Teton Reservoir's]
reservoir would be injurious to these other storage rights
and decreed users downstream who have come to rely on the
water commissioner's control and regulation of [Teton
Reservoir's] water usage.
the District Court recognized that "the significance of
prior history and usage set forth in the depositions of Judge
McPhillips and Commissioner Bud Olson will be for the Montana
Water Court and not this Court to decide" and "this
Court has no authority to decrease a ...