Date: 01-18-2017

Case Style:

Case Number: 2016 MT 348

Judge: Mike McGrath

Court: IN THE SUPREME COURT OF THE STATE OF MONTANA

Plaintiff's Attorney:

John C. Cruden, Assistant Attorney General, Elizabeth Ann Peterson, John L. Smeltzer(argued), James J. Dubois, Anna K. Stimmel, Appellate Attorneys, United States Department of Justice

Defendant's Attorney:

John E. Bloomquist

Rachel K. Meredith

Description: In Montana’s ongoing water rights claims adjudication proceedings, the BLM
filed six water right claims related to five reservoirs and one natural pothole. The five
reservoir claims are based in Montana law while the Pothole Lake claim is based upon a
federal reservation of lands. The water sources are located wholly or partially on federal
land, and the BLM claims the right to use each for stockwatering by its grazing
permittees and for wildlife. In June 2014 the BLM moved for summary judgment on the
objections raised to each claim. The Water Court consolidated those claims, objections
and motions for summary judgment into the present single case.
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¶4 In November 2014 the Water Master recommendedsummary judgment in favor of
the BLM on each of these claims, finding that the claims were valid and properly owned
by the BLM. The Objectors objected to the Water Master’s recommendation, but agreed
in briefing that the BLM had the right to obtain water rights in its name under Montana
law for use on federal lands.1 The Objectors stated the issue as whether the BLM “under
applicable state and federal laws, actually made appropriations for beneficial use.” The
Objectors contend that the BLM did not perfect any water rights and sought an order
from the Water Court transferring all of the claimed BLM water rights to the current
grazing permittee on the federal lands, and an order terminating all the wildlife claims.
The Water Court upheld the Water Master’s recommendation in most respects, and the
Objectors appeal.
¶5 The following is a summary of the BLM claims involved in the present case.
Windy Day Reservoir (Claim 40M 74594-00) was built by the BLMin August 1955 with
theparticipation and cost-sharing of Marie Karstens-Redding, the BLM grazingpermittee
at the time. The French objectors in the present appeal own property surrounding the
Windy Day Reservoir. They claim that as early as 1911 individual “free grazers” who
were ancestors or predecessors to their current land interests (hereafter “ancestral free
grazers”) “owned livestock” on the land now containing this reservoir.
¶6 North Flat Creek Reservoir (Claim 40M 74590-00) was built by the BLMin 1937.
It is partially located on lands patented by Elsie Kemp/Tole in 1923 and conveyed to the 1 Federal law recognizes the jurisdiction of state courts to resolve federal water rights claims. 43 U.S.C. § 666; Confederated Salish & Kootenai Tribes v. Clinch, 2007 MT 63, ¶¶12-13, 336 Mont. 302, 158 P.3d 377.
4
Frenches in 1995. Frenches filed a statement of claim to a use right for stockwater out of
the reservoir. They claim that as early as 1911 ancestral free grazers placed livestock on
the land now containing this reservoir.
¶7 Tallow Creek Reservoir (Claim 40M 74670-00) was built by the BLM in June
1936. The Objectors contend that ancestral free grazers in the area of this reservoir
owned livestock there as early as 1915, and that their stock grazed in the area and drank
water.
¶8 Sharon Reservoir (Claim 40M 74883-00) was built by the BLM in 1961 with the
assistance of the Oxarart Brothers, grazing permittees at the time. M Cross is a grazing
permit successor to Oxararts and has repair and maintenance responsibility for the
reservoir. M Cross claims that its ancestral free grazers “owned livestock” on property
around Sharon Reservoir “as early as 1917” and that they grazed and wateredthe stock.
¶9 The Water Court found as undisputed facts that the preceding four reservoirs were
developed by the BLM and that the BLM’s claimed priority date for each stockwater
right is the date the reservoir was completed. The BLM does not own livestock, but
provides the water for use by grazing permittees and others. The Water Court found that
the reservoirs have been “consistently used for stockwatering since they were
completed.”
¶10 The Water Court found that it was undisputed that none of the Objectors or their
predecessors filed claims for stockwatering from any of the sources of water that are
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impounded in the reservoirs. The exception is the claim filed by Lela and William
French, claim 40M 169526-00,for stockwater fromthe North Flat CreekReservoir.
¶11 The Water Court noted that the common law elements of a valid (use right)
appropriation of water are intent to appropriate, notice of the appropriation, diversion and
beneficial use. In the Matter of the Adjudication of Existing Rights (Bean Lake III), 2002
MT 216, ¶ 10, 311 Mont. 327, 55 P.3d 396. Prior to 1973 an appropriator in Montana
could secure a water right simply by putting the water to a beneficial use. Mont. Trout
Unlimited v. Mont. DNRC, 2006 MT 72, ¶ 5, 331 Mont. 483, 133 P.3d 224. The Water
Court concluded that impoundment of water in a reservoir is a sufficient diversion of
water to support a claim to a use right of water under Bean Lake III, and noted that the
Objectorscontested only whether the BLM had applied the water to a beneficial use. The
Objectors contended that since the BLM did not own any livestock of its own, it did not
use water from the reservoirs and therefore could not have perfected the stockwatering
claimsunder Montana law.
¶12 The Water Court resolved this issue by applying this Court’s venerable opinion in
Bailey v. Tintinger, 45 Mont. 154, 122 P. 575 (1912), relied upon by both the BLM and
the Objectors. Bailey established that a person, association or corporation could
appropriate water under Montana law “to sell, rent, or otherwise dispose to others.”
Under the principles of the Bailey case, an appropriation of water for the use of others
was complete upon completion of the diversion system (in this case the reservoirs) and
making the water available for use by others. Bailey, 45 Mont. at 166-67, 122 P. at 579.
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The Water Court concluded that these principles applied to appropriations by the United
States and that ownership of stock was not required to complete the appropriation.
Finally, the Water Court determined that participation by non-governmental parties in the
construction or maintenance of some of the reservoirs did not affect the validity of the
BLM claims because Montana law recognizes that multiple claims may exist in the same
source of water. St. Onge v. Blakley, 76 Mont. 1, 23, 245 P. 532, 536 (1926); Mont.
Trout Unlimited, ¶ 7.
¶13 The BLM acquired the Funnells Reservoir (Claim 40M 74655-00) in 1951 when it
acquired some of the surrounding property. At that time the damwas in place providing
1.2 acre feet of water storage. The BLM claims a priority date in this reservoir of August
1945. A portion of the reservoir is on Barthelmess land, and Barthelmess filed a
stockwater claim in the reservoir. Barthelmess also contends that its ancestral free
grazershad stock inthe area around Funnells as early as 1915. The Water Court found as
an undisputed fact that the reservoir has been used for stockwater consistently since the
BLM acquired its interest in the property.
¶14 The Water Court concluded that under Montana law the BLM acquired any
appurtenant water rights when it acquired the property. Section 85-2-403(1), MCA;
Maclay v. Missoula Irrig. Dist., 90 Mont. 344, 353, 3 P.2d 286, 290 (1931). In addition,
the Water Court rejected the Objectors’ argument that the BLM could not show when the
reservoir was constructed or when it was actually used for stockwatering, and that the
BLM water claim therefore could only date from when it acquired the property in 1951.
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The Water Court noted that this argument was inconsistent with the Objectors’ own
contention that they derived rights from their ancestral free grazers who had grazed
animals in the same area since 1915. In addition, the Water Court held that under
Montana law a statement of water right claim is prima facie evidence of its content,
§85-2-227, MCA, and Teton Co-Op Canal Co. v. Teton Coop Reservoir Co., 2015 MT
344, ¶20, 382 Mont. 1, 365 P.3d 442, and that the Objectors had not carried their burden
to prove that essential elements of the BLM water right claim were incorrect. As was the
case with the prior BLM reservoirs, the Water Court noted that under Montana law two
parties can claim ownership in water rights from the same source.
¶15 Pothole Lake (Claim 40M 74579-00) is a natural feature2 located on BLM land
that has been available for use by others. The Objectors, for example, claim that
Frenches or their ancestral free grazers grazed stock in the area of the Pothole as early as
1917. The BLM claims a reserved water right in the Pothole with a priority date of April
1926. The claim of a reserved right is based upon the Stock Raising Homestead Act
(SRHA) enacted by Congress in 1916 and the Public Water Reserve (PWR) No. 107
signed by the President in April 1926. The SRHAallowed the Secretary of the Interior to
reserve lands that “contain waterholes or other bodies of water needed or used by the
public for watering purposes.” 43 U.S.C. § 300 (1912). The subsequent PWR 107
reserved all springs and water holes on vacant, unappropriated, and unreserved public
2 A “pothole” in this context usually describes a natural depression in the landscape that contains water.
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land throughout the country. The Water Court found that the Pothole Lake was part of
the reservationof land and water provided for by PWR 107.
¶16 The Objectors contended as to all of the BLM claims, that their ancestral free
grazers grazed the land and watered their stock in the available water sources long prior
to construction of any of the BLM reservoirs. The Objectors contend that they thereby
obtained the sole and paramountrightto all of the waters at issue in this case andthat any
BLM claims to water should therefore be transferred to them.
¶17 The Water Court concluded that any stockwatering by the Objectors’ ancestral
free grazers were direct uses from the water sources, unaided by reservoir impoundments,
and are therefore separate from the subsequent BLM reservoir claims. The governing
principle of water law is that the existence of a prior right or claim in a particular water
source does not preclude appropriation of subsequent rights from the same source.
St. Onge, 76 Mont. at 23, 245 P. at 536; Mont. Trout Unlimited, ¶¶ 7-8. This principle is
at the core of appropriation water rights under Montana law, allowing multiple
appropriators to enjoy rights from the same source of water. The Objectors’ claim that
prior use by their ancestral free grazers precludes later claims by the BLM or any other
person or entityis contrary to the precepts of prior appropriation.
¶18 The Objectors also argued that prior Water Court decisions support their argument
that they should be given title to the right to use the water stored in the BLM reservoirs.3
The Water Court disagreed with the Objectors’ construction of these decisions. 3 Edwards v. BLM, Water Court Case No. 40E-A (Water Court Opinion June 29, 2005); Hamilton Ranches v. BLM, Water Court Case No. 41G-190 (Water Court Opinion July 19, 2005).
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Construing its own decisions, the Water Court found that “neither case addressed any
restriction on BLM ownership of stock claims on federal land or found that stock rights
on federal land must be owned by permittees.” In addition, one of the cases “recognizes
that stock rights on federal land are routinely owned by the BLM.”
¶19 In addition to BLM stockwater claims, the BLM also claimed the right to provide
water for wildlife at each of the reservoirs and the Pothole Lake. The Objectors argued
that any wildlife use was only incidental to stockwatering, and that the BLM never
intended to appropriate water for wildlife, never gave notice of any intent to do so, and
never took steps to put water to use for wildlife, thereby precluding any claim under
Montana law. The Water Court disagreed, finding that claims for fish, wildlife and
recreational use are recognized by Montana law, and that no diversion is required when a
diversion is not necessary for the wildlife use. Bean Lake III, ¶ 40.
¶20 The Water Court determined that the nature and extent of a water claim for
wildlife use “depends on the specific facts surrounding the claimed appropriation” and
that wildlife claims must be supported by evidence of intent to appropriate, notice of
intent and application of the water to a beneficial use. The Water Court relied upon
statements by Congress referencing management of BLM lands for stock and for wildlife
as showing intent to do so. In addition, publication of these Congressional statements
and enactments gave notice that the BLM intended to appropriate for wildlife. The Water
Court found that developing the reservoirs was sufficient appropriation to consummate a
right for wildlife uses. Because wildlife uses require less water than consumptive uses
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such as stockwatering, adding wildlife uses to each of the reservoirs did not expand the
amount of water claimed. Therefore, as to the four reservoirs constructed by the BLM,
there was sufficient proof of a water right for wildlife.
¶21 As to the Funnells Reservoir, the BLM acquired it as a constructed facility in
1951. The Water Court found that the same Congressional enactments that supported a
wildlife claim for the first four reservoirs, constructed by BLM, also supplied the
required intent for Funnells. While Funnells was originally constructed for
stockwatering, the Water Court found that when the BLM acquired it in 1951, wildlife
had already benefitted from its water, and after that time it was also managed for wildlife
use. This represented a change in the stockwater right the BLM acquired with the
reservoir. The law in effect at the time of this change, § 89-803, RCM (1947, repealed in
1973), required no prior approval for a change in use, and the wildlife claim did not
represent a new appropriation because it did not expand the amount of water used.
Therefore under that statute the Water Court determined that the priority date for the
wildlife use related back to the priority of the original appropriation in 1945, before the
BLM acquired the facility.
¶22 As to the Pothole Lake, the Water Court determined that there are factual issues
that remain to be decided concerning the wildlife claim for that water source. The Water
Court remanded the wildlife portion of the Pothole Lake claim to the Water Master for
further proceedings.
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¶23 The Water Court last determined that the volume of water for each of the BLM
claims remained unresolved. While the BLM argued that the Objectors had not refuted
its volume claims, the Water Court accepted the Objectors’ argument that they had not
been given a full and fair opportunity to present evidence as to the volume of water that
should be decreed to each of the BLM storage claims. Therefore the Water Court
remanded all of the BLM claims to the Water Master for further proceedings on the
volume of each of the BLM storage claims.
¶24 The Objectors appeal.
STANDARD OF REVIEW ¶25 This Court recently set out the standards of review in an appeal from the Water
Court’s review of a Water Master’s report. Heavirland v. State, 2013 MT 313, ¶¶ 13-16,
372 Mont. 300, 311 P.3d 813; Skelton Ranch v. Pondera County Canal & Res. Co., 2014
MT 167, ¶¶ 25-27, 375 Mont. 327, 328 P.3d 644. In summary, the Water Court reviews
the Water Master’s findings of fact under the “clearly erroneous” standard, and reviews
the Water Master’s conclusions of law to determine whether they are correct. This Court
reviews the Water Court’s decision under the same standards as applied to the review of
District Court decisions.
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DISCUSSION ¶26 Issue One: Whether the Water Court erred in concluding that the United States Bureau of Land Management (BLM) holds stockwatering rights under Montana law in reservoirs constructed on federal land, for the use of grazing permittees.
¶27 The Objectors argue that the BLM did not properly perfect state law water rights
in the reservoirs and so may not maintain claims in the adjudication process.4 As noted
above, perfecting a water appropriation claim in Montana prior to 1973 requiredanintent
to appropriate, notice of the appropriation, diversion and beneficial use, Bean Lake III,
¶10. While the Objectors acknowledge that Montana law allows an appropriator to
appropriate water for sale or distribution to others, they contend that the BLM does not
qualify to do so. The Objectors also contend that the BLM never applied water to a
beneficial usebecause itdid not own any livestock andthereforecould not have perfected
the stockwatering claims.
¶28 The parties argue that Bailey either supports or defeats the BLM water claims. A
primary issue in Baileywas whether a person could appropriate water under Montana law
“to sell, rent, or otherwise dispose to others” without otherwise using the water himself.
This Court in Bailey held that Montana law recognized that an appropriation of water to
be used by others was complete upon construction of the diversion system (such as a
reservoir) and making the water available to others. Bailey, 45 Mont. at 166-67, 122 P. at
579. This Court recently explained the holding inBailey:
The appropriation of water for sale has long been accepted as a beneficial use. Our first Constitution in 1889 explicitly recognized the right to sell 4 This argument excludes the claim for the Pothole Lake, which is not a claim based in state law.
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and rent water to others as a beneficial use. Mont. Const. art. III, § 15. The verbiage used in the 1889 Constitution referencing the sale of water was imported almost verbatim nearly one hundred years later into the 1972 Constitution. Compare Mont. Const. art. IX, § 3 with Mont. Const. art. III, § 15 (1889). This constitutional provision, along with its interpretations in our case law, clearly shows a steadfast commitment to recognizing the ability to appropriate water for its ultimate use by a third party.
Curry v. Pondera County Canal & Reservoir Co., 2016 MT 77, ¶ 25, 383 Mont. 93, 370
P.3d 440 (internal citations omitted). The Water Court in the present case concluded that
these principles applied to appropriations by the United States, and that Montana law did
not require that the BLM own and graze livestock to perfect a water right.
¶29 The Objectors next argue that Bailey established a rule that only a “public service
corporation” can appropriate water for use by third parties. The Objectors argue that
since the BLM is not a “public service corporation” it cannot perfect its claims to
appropriate water for the use of others under Montana law. An examination of the Bailey
Opinion shows that the Objectors misconstrue its holding.
¶30 The dispute in Bailey involved water right claims in Big Timber Creek. In 1892
three individuals commenced work on an appropriation of water, some for their own use
and the rest to “sell, rent, and otherwise distribute” to others. One of those individuals,
named Hatch, succeeded to the interests of his former partners in the appropriation; an
individual named Wormser succeeded to Hatch’s interests; and a subsequently-organized
canal company succeeded to the interests of Wormser. The canal company continued to
construct miles of canals and ditches to distribute the water to customers, and its interests
were acquired by yet another company. By 1910 the original appropriation by Hatch and
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his partners was being used to distribute water to others who were irrigating about 1000
acres. A controversy arose with other appropriators over whether successive
enlargements to the capacity of the system were new appropriations or whether they
related back tothe original Hatch appropriation in1892.
¶31 The BaileyOpinion traced the history of Montana law relating to the appropriation
of water, Bailey, 45 Mont. at 166-75, 122 P. at 581-82, concluding that since 1877
Montana law “specifically recognized the right of an individual to appropriate water to
rent or sell to another.” Bailey, 45 Mont. at 174, 122 P. at 582 (emphasis added). The
Bailey Court noted that since 1907 it has “been held that the appropriator need not be
either an owner or in possession of land in order to make a valid appropriation for
irrigation purposes.” Bailey, 45 Mont. at 175, 122 P. at 582. Further:
In cases of appropriation for the purpose of supplying water to others, we do not understand how it can be said that the use of the water is an essential element of its appropriation. If the intended appropriator constructs the works and appliances necessary for the diversion of the water and the carrying of it to points where its use is desirable and profitable, and has actually carried it there, or is ready and willing to do so and offers it to all persons who are willing to pay for its use, we apprehend that his appropriation is complete.
Bailey, 45 Mont. at 177, 122 P. at 583. The Bailey Court warned that unless such
appropriations were allowed it would “retard the reclamation of arid lands” in areas
where the “magnitude of the undertaking is too great for individual enterprise.” The
Court warned that failure to adopt such a policy could also defeat the land reclamation
goals of the United States in making appropriations “as a corporation or individual” for
use by others. Bailey, 45 Mont. at 177, 122 P. at 583.
15
¶32 The Bailey Court then declared it the public policy of the State of Montana to
encourage “public service corporations” to appropriate water for sale, rental or
distribution to others. Bailey, 45 Mont. at 177, 122 P. at 583. The Bailey Court did not
define “public service corporations.” At the time the Bailey case was litigated the entity
that owned the original Hatch appropriation from Big Timber Creek was called the
“Glass-Lindsay Land Company.” The Bailey Opinion stated that Glass-Lindsay was
“organized under the laws of this state” with the “authority to purchase or construct an
irrigation system and to sell, rent or otherwise dispose of water.” Bailey, 45 Mont. at
161, 122 P. at 577. The Objectors assume from this that Glass-Lindsay was organized as
a corporation under Montana law and that organization as a corporation under Montana
law was therefore a vital prerequisite to appropriating water for the eventual use by
others.
¶33 This assumption is not warranted by the Bailey Opinion, which clearly did not
limit appropriations for sale or use by others to “public service corporations.” Critically,
the Objectors’ construction of Bailey overlooks the fundamental fact of the case that the
appropriation at issue there was commenced by three individuals; was then owned by one
of those individuals; and was then owned by another individual before the canal
companies got involved. The actual water right at issue in Bailey was therefore initiated
by individuals, and not by a “public service corporation.” It is also significant that the
priority date for the appropriation in Bailey related back to the date that the three
individuals put the water to use, and was not the later date when the canal companies
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appeared. Regardless of the fact that theBaileyOpinion referred to the entity holding the
appropriation at the time of the opinion as a “public service corporation,” that entity was
holding an appropriation initially established by individuals. And, significantly, the
Bailey Opinion, as noted, expressly recognized the right of the United States to proceed
under Montana law to appropriate water to sell, rent or otherwise dispose of to others.
¶34 Under the law established in Bailey, there is no “public service corporation rule,”
but only the recognition of a public policy of the state of Montana to allow and even
encourage individuals and entities whoare able to do so to appropriate water and make it
available for use by others. Curry, ¶ 25. We also reject as being without support, the
Objectors’ argument that the BLM cannot appropriate water under Montana law because
it does not separately charge grazers for the use of the reservoir water. Charging money
for the water is not a requirement of perfecting a water right for “sale, rental or disposal
to others.” As long as the water is made available for sale, rental, or distribution or
disposal to others, it is a valid appropriation under Bailey. As we recently held, Montana
law “clearly shows a steadfast commitment to recognizing the ability to appropriate water
for its ultimate use by a third party.” Curry, ¶ 25.
¶35 The Dissent argues that the BLM has never put water to a beneficial use. To the
contrary, recognition that storage of water as BLM has done is a beneficial use is
expressly provided by the Montana Constitution: “The use of all water that is now or
may hereafter be appropriated for sale, rent, distribution, or other beneficial use . . . and
the sites for reservoirs necessary for collecting and storing water shall be held to be a
17
public use.” Mont. Const. art. IX, § 3(2); Curry, ¶¶ 31-33. We agree with the Water
Court that the BLM was entitled to proceed under Montana law to appropriate water in its
reservoirs for use by grazing permittees and others.
¶36 The Objectors also argue that the BLM claims are invalid because the BLM did
not appropriate any water, but “simply facilitated use of water already appropriated” by
their ancestral free grazers in the early 20th century. This argument cannot be supported
under Montana water law. First, as previously noted, it has long been the common law
and then statutory law in Montana that multiple appropriators can claim water rights from
the same source, and that the first in time has the best right. It is well known that there
have been so many different appropriators on some water sources that the waters have
become “over appropriated” in that the amount of water claimed by all the appropriators
far exceeds the water actually available. Mont. Trout Unlimited, ¶¶ 7-8. While
over-appropriation creates its own issues, it does not mean that the person or entity that
made the first use on a water source acquired the right to exclude any other person or
entity from claiming water from the same source. Far from it, as we have said, a
fundamental precept of Montana water law is that multiple claims can exist on a single
source of water. Adopting the Objectors’ position would cause chaos in Montana prior
appropriation law. Senior appropriators could claim not just that they had the earliest
right to use water in a stream, but also that no one else could claim rights from that
stream because the senior appropriators were there first—an argument contrary to the
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fundamental precepts of prior appropriation law. Federal Land Bank v. Morris, 112
Mont. 445, 456, 116 P.2d 1007, 1012 (1941).
¶37 The BLM is not claiming water rights based upon any ancestral free-grazer
stockwater use in the early years of the twentieth century such as that cited by the
Objectors. The BLM claims are clearly based upon subsequent appropriations via
reservoir construction. The earliest BLM claim in this case is 1926 (Pothole Lake) and
the latest is 1961 (Sharon Reservoir). If the Objectors hold any viable stockwatering
claims based upon water use in the first decades of the twentieth century, those rights are
separate from and clearly would be senior to, any reservoir rights claimed by the BLM.5
As the Water Court concluded, those early water uses were direct from the source,
unaided by any reservoir storage. Any right arising from theancestral free grazing before
World War I is separate from the later BLM reservoirs, and the existence of prior rights
does not preclude subsequent appropriation of water from the same sources. Each right
has its own priority in time.
5 The Objectors assert, and the Water Court seems to have agreed, that their ancestral free grazers utilized water on public lands to water their stock a hundred or more years ago. However, at least in the briefing in this appeal, the Objectors do not cite any specific water right claim based upon this historic stockwatering. The Water Court noted that at least as to claims to water in the BLM reservoirs, Montana law required that the Objectors file their claims by July 1, 1996, at the latest, and that if they failed to do so, they lost their right to make such claims. Section 85-2-226, MCA; Matter of the Adjudication of Water Rights in the Yellowstone River, 253 Mont. 167, 175, 832 P.2d 1210, 1214 (1992). The Water Court specifically held, however, that under § 85-2-222(1), MCA, failing to file on in-stream stockwater uses is optional and that the Objectors could still voluntarily file claims on those rights if they choose to do so. The Objectors do not expressly claim that the BLM claims are objectionable because the reservoirs interfere with the Objectors’ prior rights to water.
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¶38 Second, the Objectors contend that the BLM’s construction of the reservoirs “did
not constitute a new appropriation” but “simply modified” the prior stockwatering
practices by theirancestral free grazers. It is certainly true, as the Objectors concede, that
a direct-flow water user can add a reservoir to stabilize the available water so that it can
be used throughout the year, without creating a new appropriation. Teton Cooperative
Res. Co. v. Farmers Cooperative Canal Co., 2015 MT 208, 380 Mont. 146, 354 P.3d
579. This is not what happened in the case of the BLM reservoirs. The BLM does not
claim any earlier direct-flow water rights. It claims only new rights to stored water, with
appropriation dates in the mid-twentieth century. Contrary to the Objectors’ argument,
this situation is materially different from the one considered in Teton. Additionally, In
Granite County v. McDonald, 2016 MT 281, 385 Mont. 262, ___ P.3d ___, decided
November 3, 2016, we upheld the water right of a subsequent reservoir owner to
impound water on a stream as long as it did not interfere with the senior rights of
downstream direct-flow users. In fact, that relationship had been recognized by a water
right decree entered in 1906. This, and not Teton, represents the present situation with
regard to the BLM reservoirs and the rights, if any, deriving from ancestral free grazers.
The BLM rights are separate rights with their own priority dates.
¶39 We emphasize that the foregoing analysis of the Objectors’ claims is based upon
fundamental and long-established principles of Montana water law. The first in time is
the first in right, and multiple persons may therefore perfect claims to water from the
same source as is the case across the breadth of our State. Ignoring this fundamental
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principle to uphold the Objectors’ claims in this case would throw Montana water rights
into chaos. Water use by the Objectors’ ancestral free grazers does not, under established
Montana law, preclude the BLM or any other person or entity from making a claim of
water right in the same source. Further, it could not be more clear that for over one
hundred years Montana has recognized the right of individuals and entities to appropriate
water for the sale, rental, or distribution to others. There is no “public service
corporation” limitation upon this important principle of law. It has long been the public
policy of Montana to recognize and encourage the benefits to agriculture and stock
raising that flow from allowing appropriations that make water available for the use of
others. We are unwilling to depart from these bedrock principles of Montana water law
in this case. Finally, the principle of loss by “nonuser” (Dissent ¶ 66, quoting Bailey), is
not an issue in this case and the Water Court has yet to adjudicate the quantity of the
BLM rights.
¶40 Because we agree with the Water Court that the BLM has valid appropriations
under Montana law, and that there is no basis in fact or in law to assign ownership of the
BLM claims to the Objectors, we decline to consider the Objectors’ arguments
concerning the authority ofthe Water Court to do so.
¶41 Issue Two: Whether the Water Court erred in granting partial summary judgment on the Pothole Lake claim when there were genuine issues of material fact.
¶42 The Water Court noted that the Objectors did not challenge the fact that PWR 107
can serve as the basis for a reserved stock water right on federal land. In fact, it is well
established that the SRHA and PWR 107 provide a valid basis upon which the federal
21
government can support claims to reserved water rights. Other state courts have
recognized the validity of these claims in their water adjudication processes. United
States v. Denver, 656 P.2d 1, 32 (Colo. 1982) (Court agreed that the federal government
has “reserved rights to provide a watering supply for animal and human consumption . . .
so that no person could monopolize or control vast areas of western land by
homesteading the only available water supply.”); United States v. Idaho, 959 P.2d 449,
452 (Idaho 1998) (“After considering the plain and ordinary words of the enabling
statutes and executive order underlying PWR 107, we conclude that PWR 107 evidences
an express intention by Congress that reserves a water right in the United States.”)6
These courts recognized that giving a single party control of these reserved water sources
could lead to the monopolization of the water and surrounding land, contrary to the
express intent of Congress.
¶43 The Objectors’challenge to the PotholeLake water claim is based upon arguments
that it is too small to qualify for reservation under PWR 107; that the BLM has never
listed the Pothole in its inventory of such reserved water sources; and that the BLM did
not present this claim to the Montana Reserved Water Rights Compact Commission. The
Objectors cite a federal regulation from 1980 which states that the reservation provisions
of SRHA and PWR 107 should not be applied to “small springs or water holes affording
6 Reserved water rights were recognized in Winters v. United States, 207 U.S. 564, 28 S.Ct. 207 (1908), a case arising from Montana, holding that when Congress established Indian reservations it impliedly reserved sufficient water to satisfy the purposes of that reservation, with a priority date as of the creation of the reservation. This concept has been extended to include all types of federal reservations of land. Cappert v. United States, 426 U.S. 128, 138, 96 S. Ct. 2062 (1976).
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only enough water for the use of one family and its domestic animals.”7 The Water Court
noted that while the Objectors contend that the Pothole is too small to qualify for
reservation, at the same time they contend that they and their ancestral free grazers have
grazed stock there since the early twentieth century. They also contend that the Pothole
right should be transferred to the Objectors for the same stockwater use. These
inconsistent positions, the Water Court concluded, undermined the Objectors’ position on
this claim.
¶44 The original PWR 107 in 1926 reserved “every spring or waterhole, located on
unsurveyed public land.” (Emphasis added.) The broad language of the reservation
clearly included this Pothole Lake and there is nothing to indicate that the original
reservation has been reversed. The Objectors misconstrue the 1980 regulation language
that they rely upon. That regulationdid not retroactively unreserve water sourceslike the
Pothole Lake that had been reserved since 1926. Rather, the regulation implemented
statutory changes that Congress made in 1976, intended to limit future reservations of
federal land. United States v. Idaho, 959 P.2d at 453. The regulation that the Objectors
rely upon has no effect upon the original intent of SRHA and PWR 107 and does not
provide any support for an argument that the property has been unreserved. The BLM’s
failure to inventory this Pothole was likewise not significant in light of the original
withdrawal, and while the BLM could have submitted its claim to the Reserve Water
Right Compact Commission, it was not required to do so.

Outcome: