Teton Cooperative Reservoir Co. v. Farmers Cooperative Canal Co.

Teton Cooperative Reservoir Co. v. Farmers Cooperative Canal Co., 2015 MT 208 (July 28, 2015) (Wheat, J.) (5-0, aff’d)

Issue: (1) Whether the Water Court applied an incorrect standard of law in deciding that FCCC’s reservoirs were included in its 1895 and 1897 water rights; (2) whether the Water Court’s findings regarding FCCC’s historical use were clearly erroneous; (3) whether the Water Court’s finding that FCCC’s water use did not increase after the reservoirs were constructed was clearly erroneous; (4) whether the Water Court erred in limiting FCCC’s diversion period in response to TCRC’s objections.

Short Answer: (1) No; (2) no; (3) no; and (4) no.

Affirmed

Facts: FCCC was incorporated in June 1897 to appropriate, transport, and use irrigation water from the Teton River. It acquired its first water right from one of its incorporators shortly thereafter. In 1908, a district court determined that FCCC had a right to 4,000 miner’s inches with a priority date of Aug. 1, 1897. The court also determined priority dates and flow rates for several other water rights from the Teton River, one of which was for 300 miner’s inches with a priority date of June 15, 1895. FCCC bought that right in 1966.

Because FCCC did not hold the most senior rights on the Teton, it was often left with little or no water between early July and late fall. To stabilize its water flow, it constructed Harvey Lake Reservoir in 1913 and Farmers Reservoir in 1942, and was able to release water as needed throughout the year.

FCCC filed statements of claim for its 1895 and 1897 rights, claiming use of the reservoirs as part of those rights, which appeared in the temporary preliminary decree for the Teton River, Basin 410. Several entities objected, including TCRC.

TCR claims a water right to the Teton junior to FCCC’s 1895 and 1897 rights. It built its own reservoir at some point between the construction of Harvey Lake and Farmers Reservoirs. TCR contends FCCC’s reservoirs were not part of its 1895 or 1897 rights, and were instead new appropriations not entitled to either of the earlier priority dates.

Procedural Posture & Holding: The Water Court held a hearing and issued an order resolving the objections. It held that FCCC has a right to 4,000 miner’s inches with an 1897 priority date, and a right to 300 miner’s inches with an 1895 priority date. It held that FCCC overstated its period of diversion and limited FCCC to its historical period of diversion, which it found to be March 1-November 30. It found that the reservoirs were not new appropriations, as they did not change the period of diversion or the amount of water diverted. TCRC appeals, FCCC cross-appeals, and the Supreme Court affirms.

Reasoning: (1) Water storage is encouraged in Montana. Storage may be added to a direct flow right as long as the water user does not store water at a rate exceeding the rate of its right or at times outside of its diversion period.

(2) The Water Court’s findings regarding FCCC’s historical use were supported by substantial evidence, the effect of which the Water Court did not misapprehend.

(3) The Water Court’s findings regarding FCCC’s water use before and after construction of the reservoirs were supported by substantial evidence, the effect of which the Water Court did not misapprehend.

(4) FCCC cross-appeals the Water Court’s finding that its 1895 and 1897 rights were limited to a March-November diversion. The DNRC remark raised the same issue as TCRC’s objections. The Water Court would have had to conduct the same analysis and would have reached the same conclusion regardless of whether TCRC had objected.