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    • Exempt Well Updates: Subdivision Review Process and Combined Appropriation Guidance

    Recent legislation and litigation have impacted DNRC’s processes for authorizing exempt wells in Montana. This webpage provides information about the current status of DNRC’s exempt well evaluation process, as well as what’s on the horizon.

    To understand what has changed, what has not changed, and whether you need to take action, it is helpful to understand several key terms and concepts.

    All water uses starting after June 30, 1973, require a water right in the form of either a water use permit or a water right issued under an exception to the permitting process.

    Water Permits: A water permit is required for all surface water use and groundwater uses over 35 gallons per minute (gpm) or 10 acre-feet per year. DNRC reviews and evaluates six permit criteria when reviewing water permit applications, and there are opportunities for public comment and objection. If a valid objection is received, additional evidence and information is considered at an administrative hearing.

    Permit Exceptions, a.k.a. Exempt Wells: Small groundwater developments that use 35 gpm or less and do not exceed 10 acre-feet per year, are known as “exempt wells” and may qualify for an exception to the water permit process. Completed groundwater uses that meet the permit exception receive a Groundwater Certificate rather than a water permit (85-2-306, MCA). 

    Montana law contains an important sideboard on the use of exempt wells intended to prevent larger water diversions from getting around the permit process. This limitation is referred to as “combined appropriation.” Section 85-2-306, MCA, provides that a permitted water right is required for “a combined appropriation from the same source by two or more wells or developed springs exceeding 10 acre-feet, regardless of the flow rate.”

    This law requires DNRC to determine whether two or more groundwater developments that draw from the same source should be considered as a single exempt use of water, thereby requiring users to share the 10 acre-feet exception to the permitting process.

    The term “combined appropriation” is defined in administrative rule. The definition requires that DNRC weigh various factors to determine whether a set of groundwater developments could have been accomplished by a single appropriation and therefore must share the same 10 acre-feet. (ARM 36.12.101(12)).

    From September, 2014 to February, 2024, DNRC coordinated with the Montana Department of Environmental Quality (DEQ) on issuing subdivision review letters. These letters included DNRC’s evaluation of proposed water use for housing developments seeking a Certificate of Subdivision Approval (COSA) through DEQ. They did not approve or guarantee a current or future water right.  DEQ’s rules previously required COSA applicants to obtain a subdivision review letter from DNRC. A Memorandum of Understanding (MOU) between the two agencies outlined DNRC’s obligation to provide these letters.

    Shortly after the decision in Upper Missouri Waterkeeper, et al v. DNRC, Cause No. BDV-2022-38 (discussed in the following tab), DNRC and DEQ terminated their MOU. DEQ also engaged in rulemaking to repeal its rule requiring subdivision review letters as a condition of obtaining a COSA.

    On February 14, 2024, Montana’s First Judicial District Court issued an order in Upper Missouri Waterkeeper, et al v. DNRC, Cause No. BDV-2022-38, (often referred to as the “Horse Creek Hills case”). The Court ruled that DNRC could not allow a developer to appropriate up to 10 acre-feet of water under the permit exception (i.e., using exempt wells) for each phase of a four-phased subdivision. The Court concluded that DNRC was required to treat all phases of a multi-phased development as part of the same combined appropriation.

    Moving Forward

    The water administration results of the Upper Missouri Waterkeeper case are twofold. First, DNRC no longer provides subdivision review letters. Second, all lots in a multi-phase subdivision must now share a combined water use limit of 10 acre-feet per year to qualify for a permit exception. This means some subdivisions may not have enough water under a single exception to serve every home. In response, DNRC worked with stakeholders to draft two bills for the 2025 Legislative session to help affect property owners and bring more clarity to the process. One of the bills, House Bill 681 (HB 681), passed and will become effective on January 1, 2026. HB 681 introduces coordination, efficiency, and consumer protection to subdivision review by providing certainty on water rights at the beginning of the building process:

    • One of the bills, House Bill 681 (HB 681), passed and will become effective on January 1, 2026. HB 681 introduces coordination, efficiency, and consumer protection to subdivision review by providing certainty on water rights at the beginning of the building process.
      • Water users will be required to file a Notice of Intent with DNRC prior to using water from an exempt well under 85-2-306(3)(a)(iii) or (3)(a)(iv), MCA. DNRC must authorize or deny a correct and complete Notice of Intent within 10 business days.

    • The other bill, Senate Bill 358 (SB 358), sought to reform exempt well policy in Montana while also supporting existing homeowners in achieving water right compliance. SB 358 did not pass. In the absence of a legislative solution for water users impacted by the court decision DNRC is conducting outreach to Montana water users on how they may be impacted.

     

    DNRC is committed to working toward clear exempt well processes, as well as attainable alternatives when use of exempt wells is not appropriate, particularly in closed basins. This effort to review, improve, and streamline the process of obtaining mitigation water may result in policy proposals for 2027.

    Frequently Asked Questions

    • To determine if you already have a water right, use DNRC’s Water Rights Query System. Be sure to search for water rights with a place of use that matches property you own in addition to water rights where you are the listed owner. If you have any questions or are having trouble finding your water right, please contact your DNRC water resources regional office.

    • Note: Authorized Notices of Intent will be searchable through the Water Rights Query System, helping buyers and planners confirm water eligibility for specific parcels.

    Water Rights Query System (WRQS)

    • If you already have a water right which covers your current water uses, there is no impact to you. It is always a good idea to visit the DNRC Water Rights Query System and verify that your information is correct. If you are in a subdivision that is impacted by the court decision, DNRC encourages you to consider voluntarily reducing your allocation to allow your neighbors to use water under the same permit exception as you.
    • It is not likely that your developer or well driller filed a water right on your behalf. You can search for your water right on DNRC's Water Rights Query System. If you do not see a water right in your name, please contact your DNRC water resources regional office and complete the necessary paperwork.

    • DNRC water resources offices can be found here: Regional Offices
    • If a complaint is filed by the public and there is a violation of the Montana Water Use Act, DNRC generally initiates the following procedure:
      • Investigate: Upon receiving a formal complaint, DNRC will investigate the alleged violation of the Montana Water Use Act and communicates findings with both parties.
      • Educate: DNRC will educate parties on the law and the violation. 
      • Seek Compliance: DNRC seeks to gain voluntary compliance before going forth with formal action.
      • Enforcement: DNRC evaluates the severity and impact of the violation to prioritize whether to proceed with Department-led enforcement.  
    • Complainants may also seek legal remedies independently from DNRC if they choose to.

    House Bill 681

    • Applicants will file a Notice of Intent and receive authorization from DNRC prior to putting water to use. This allows DNRC to evaluate if the use meets the exception requirements before investment into infrastructure. For applicants, the process provides certainty about whether or not they qualify to use the permit exception prior to land development.
    • An authorized Notice of Intent expires after 5 years. There is the opportunity for one 5-year extension to complete the project and put the water to use.
    • Even if you're already using water or have drilled your well, you must file a Notice of Intent after January 1, 2026. DNRC will not be able to process a Notice of Completion of Groundwater Development (Form 602) after January 1 without an approved Notice Of Intent.

    • If you are already using water, you may file a Notice of Completion of Groundwater Development (Form 602) prior to January 1 without the need for a Notice of Intent.
    • The Notice of Intent will require similar information to what was previously required when filing a Notice of Completion of Groundwater Development.

    • Like other water rights forms submitted to DNRC, Notices of Intent will need to be deemed “correct and complete” before they can be processed. In plain language, this means that they must contain all the information DNRC needs to make a determination.

    • In the case of a Notice of Intent, this includes information about the proposed point of diversion, place of use, and how you intend to divert and use the water.
    • After January 1, DNRC will not be able to process a Notice of Completion of Groundwater Development (Form 602) without an accompanying approved Notice of Intent.

    • All new uses of water in Montana require a water right.
    • If the Notice of Intent is denied, this means that the proposed use is not eligible for an exception to the permitting process, i.e., an exempt well. Typically, this is because the lot is part of a combined appropriation with other water uses and the 10 acre-feet maximum has already been met or exceeded. In this case, the proposed use of water will need to be approved through the permitting process. Contact your DNRC water resources regional office for more information.