Montana Groups Challenge State Over Exempt Well Policy

HELENA, Mont. — A coalition of six nonprofit groups and three individual water users is suing the state of Montana over its long-standing practice of allowing “exempt wells” for residential development. The lawsuit, filed Wednesday in Lewis and Clark County District Court, argues that the Montana Department of Natural Resources and Conservation has enabled “unregulated groundwater development” for decades by permitting these wells without adequate review.

Exempt wells stem from a 1973 law that allows property owners to drill a well and withdraw up to 10 acre-feet of groundwater annually without proving the withdrawal will not affect nearby water users. According to the complaint, about 141,000 such wells have been drilled since the law was passed. More than two-thirds were built to supply drinking water or to irrigate lawns and gardens.

Concerns About Water Supply

The plaintiffs say the state’s current practices threaten senior water-right holders and strain Montana’s fragile water resources. They argue that the unchecked use of exempt wells has created pressure on aquifers, especially as rural development increases.

A lawsuit analysis citing Headwaters Economics data states that more than half of residential growth in Montana between 2000 and 2021 occurred outside city limits. Developers, the plaintiffs say, rely on exempt wells to avoid the state’s more rigorous permitting system.

Opponents of the current policy argue that these wells have resulted in hundreds of billions of gallons of water being appropriated without meeting constitutional standards. They also warn that the septic systems accompanying rural subdivisions add nutrient pollution to groundwater.

Voices From the Plaintiffs

The Montana League of Cities and Towns is the lead plaintiff, joined by agricultural, environmental, and recreation groups including the Association of Gallatin Agricultural Irrigators, Montana Farm Bureau Federation, Clark Fork Coalition, Montana Environmental Information Center, and Trout Unlimited.

In a written statement, Clark Fork Coalition legal director Andrew Gorder said the state must change its permitting practices to comply with the Montana Constitution, which protects existing water rights. “The cumulative impact of over one hundred thousand exempt groundwater wells can no longer be ignored,” he wrote.

Hydrogeologist and rancher Kevin Chandler, another plaintiff, contrasted his own lengthy process to secure water for his ranch with the ease of approval for nearby developments. “It’s frustrating to see a subdivision using dozens of exempt wells get approved, when the same development proposing a single shared community well would have been denied,” Chandler wrote.

Legislative Efforts and Past Rulings

State lawmakers have debated changes to the exempt well statute for nearly two decades. A recent attempt, Senate Bill 358, sought to limit new exempt wells in fast-growing valleys while allowing increased groundwater development elsewhere. The Montana Senate rejected the bill in April.

Kelly Lynch, executive director of the Montana League of Cities and Towns, said the bill’s failure pushed the group toward litigation. She noted that other Western states have narrowed similar groundwater exemptions, reserving them only for situations where they are truly necessary.

The new lawsuit follows a 2024 ruling in a similar case involving the 42-lot Horse Creek Hills subdivision. In that decision, District Court Judge Michael McMahon criticized DNRC for “torturously misreading its own rules and ignoring Supreme Court precedent.”

Upper Missouri Waterkeeper Executive Director Guy Alsentzer called the new lawsuit an encouraging step, adding that recent history shows the Legislature is “plainly incapable” of crafting a constitutional approach to managing Montana’s groundwater.

Looking Ahead

The lawsuit presents four claims for relief, all centered on protecting senior water rights and ensuring transparency in the state’s decision-making. An interim legislative committee will again review the exempt well statute, but the plaintiffs argue that nearly 20 years of study and debate have not produced meaningful change.

For now, the coalition seeks a court order to halt the state’s continued authorization of exempt wells as Montana confronts drought, rapid growth, and increasing strain on its water supplies.