No. 91-009 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

IN THE MATTER OF THE APPLICATION 

FOR CHANGE OF APPROPRIATION WATER 

RIGHTS NOS. 101960-41s AND 101967-41s 

BY KEITH AND ALICE ROYSTON. 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis and Clark, 

The Honorable Thomas C. Honzel, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Sarah Arnott Ozment argued; Attorney at Law, 

Livingston, Montana. 

For Respondent: 

James A. Hubble argued; Christensen & Hubble, 

Stanford, Montana; Donald MacIntyre argued; 

Attorney at Law, Helena, Montana. 

Filed: 

Submitted: June 12, 1991 

Decided: August 12, 1991 
Justice R. C. McDonough delivered the Opinion of the Court. 

Keith and Alice Royston appeal from an order of the First 

Judicial District Court, Lewis and Clark County, upholding the 

decision of the Department of Natural Resources and Conservation 

(DNRC) denying the Roystons' application for a change of place of 

use of water rights and a change of use from flood irrigation to 

sprinkler irrigation. We affirm. 

The Roystons raise the following issues on appeal: 

(1) Did the District Court err in holding that the Roystons, 

as applicants for a change of appropriative water rights, had the 

burden of proving lack of adverse effect on other appropriators, 

adequate means of diversion, and beneficial use of the water? 

(2) Did the District Court err in upholding the hearings 

examiner's refusal to hear evidence regarding the objectors' water 

rights? 

(3) Did the ~istrict Court err in holding that the objectors 

had standing to object to the application based upon the prima 

facie content of their claims? 

(4) Did the District Court err in determining that there was 

substantial credible evidence to support the DNRCrs denial of the 

application for change? 

(5) Are the Roystons entitled to attorney's fees pursuant to 

the private attorney general theory or another applicable theory? 

Petitioners Keith and Alice Royston applied to the DNRC to 

change the place of use of their water rights and to expand the 
number of acres irrigated. At the time of application, the 

Roystons had existing rights in Ross Fork Creek, a tributary of the 

Judith River located in Judith Basin County, Montana, pursuant to 

a preliminary decree entered by the Water Court on April 24, 1987. 

The Roystonsl existing rights are to flood irrigate 32 acres with 

a flow rate of 750 g.p.m, (gallons per minute) and to irrigate 54 

acres with a flow rate of 500 g.p.m. The application requested 

approval to change the place of use of their rights and increase 

the acreage irrigated from 86 to 266 acres. 

Respondents Turner Ranch, fnc., Basin-Angus Ranch, and 

olBrien, Inc. (objectors) filed objections. The objectors are all 

appropriators of Ross Fork Creek, junior to the Roystons, whose 

rights are set forth in the temporary preliminary decree. Turner 

Ranch is located upstream of the Roystonsl point of diversion; the 

other objectors are located downstream. The objectors complained 

that the proposed expansion of irrigated acreage and change to 

sprinkler irrigation would result in greater depletion of Ross Fork 

Creek than historically has occurred, to the detriment of the 

junior objectors . 

In September of 1988, the DNRC conducted a contested case 

hearing. Both parties introduced expert testimony regarding the 

effects the change would have on flows in Ross Fork Creek. In 

order to prevent the adverse effect alleged by the objectors, the 

applicants proposed a plan of Itwater banking1' to store water in the 

subsurface soil profile by heavily irrigating the proposed places 

of use during periods of high water in Ross Fork Creek. During 
other months the Roystons' proposal would limit their diversions 

to the flow and volume historically consumed through flood 

irrigation of the original places of use. 

On November 15, 1989, the DNRC issued its final order denying 

the Roystons' application. The Roystons petitioned the District 

Court for judicial review. The District Court affirmed the DNRC's 

decision, holding that the statute relied upon by the hearings 

examiner places the burden of proof upon an applicant for a change 

of use of a water right. The Roystons appeal the decision of the 

District Court affirming the DNRC. The DNRC has joined the 

objectors as respondents on appeal. 

Did the District Court err in holding that the Roystons, as 

applicants for a change of appropriative water rights, had the 

burden of proving lack of adverse effect on other appropriators, 

adequate means of diversion, and beneficial use of the water? 

Changes in appropriation rights are governed by 5 85-2-402, 

MCA. The statute provides in pertinent part: 

85-2-402. (Temporary) Changes in appropriation 

rights. . . . (2) Except as provided in subsections (3) 

through (5), the department shall approve a change in 

appropriation right if the appropriator Droves by 

substantial credible evidence that the following criteria 

are met: 

(a) The proposed use will not adversely affect the 

water rights of other persons or other planned uses or 

developments for which a permit has been issued or for 

which water has been reserved. 

(b) . . . the proposed means of diversion, 

construction, and operation of the appropriation works 

are adequate. 
(c) The proposed use of water is a beneficial use, 

. . . 

Section 85-2-402 (2), MCA (emphasis added). The Roystons argue that 

because a 1985 amendment deleted language referring to the 

contested case hearing stage in the application process (see § 85- 

2-402, MCA (1983)) the applicant's burden in the now amended 

statute only applies at the initial application stage and the 

burden is still on the objector at the hearing stage. Thus, 

Roystons concede that the DNRC may not summarily grant an 

application unless the applicant proves by substantial credible 

evidence that the water rights of other users will not be adversely 

affected. However, once objections are raised, they argue that the 

burden then shifts to the objectors. 

We disagree. Prior to adoption of the Water Use Act of 1973 

and amendment of 5 85-2-402, MCA, in 1985, parties objecting to the 

change had the burden of demonstrating adverse impact to their 

water rights. See Hutchins, The Montana Law of Water Rishts, pp. 

75-76 (1958) ; Holmstrom Land Co. v. Newlan Creek Water District 

(19791, 185 Mont. 409, 435, 605 P.2d 1060, 1075; Hansen v. Larsen 

(1911), 44 Mont. 350, 353, 120 P. 229, 231; Lokowich v. City of 

Helena (1913), 46 Mont, 575, 577, 129 P. 1063, 1063. However, the 

statutory scheme set forth in the Water Use Act has re-assigned 

this burden. The placement of the burden on the applicant also 

conforms to general rules regarding burdens of proof. !'The initial 

burden of producing evidence as to a particular fact is on the 

party who would be defeated if no evidence were given on either 
side. Thereafter, the burden of producing evidence is on the party 

who would suffer a finding against him in the absence of further 

evidence. Section 26-1-401, MCA. Under the statute here, the 

applicant would be defeated if neither side produced evidence. 

Also, except as otherwise provided by law, a party has the burden 

of persuasion as to each fact the existence or nonexistence of 

which is essential to the claim for relief or defense he is 

asserting. Section 26-1-402, MCA. The applicant for a change of 

appropriation right has the burden as to the nonexistence of 

adverse impact. The plain language of the statute now clearly 

places the burden on the applicant. 

The Roystons further argue that because their water rights are 

existing water rights recognized by the 1972 Montana Constitution, 

construing the statute as changing the burden of proof and placing 

it on the applicant is an impermissible retroactive application of 

a statute because it impairs vested rights acquired pursuant to the 

1972 Montana Constitution. See 5 85-2-102 (9) ; Art. IX, Sec (3) (I), 

Mont. Const. This argument fails. A water right recognized by the 

1972 Constitution does not include the right to not have to carry 

a burden of proof. This Court has held that the application of 

statutory procedures to water rights vested under the 1972 Montana 

Constitution is not unconstitutional. See Castillo v. Kunneman 

(1982), 197 Mont. 190, 642 P.2d 1019. 

In Castillo, this Court considered whether the Montana Surface 

and Groundwater Act, 55 85-2-101 et seq., MCA, applied to water 

rights perfected before the effective date of the Act. A grantor 
of land contended that the part of the Act requiring approval from 

the DNRC before severing part of an appropriation right from the 

land was unconstitutional and should not apply to water rights 

perfected before the effective date of the Act. This Court noted 

that the Act was adopted to provide for the administration and 

regulation of water rights, and further noted that the particular 

section in question, 5 85-2-403(3), MCA (deleted, sec. 16, ch. 448, 

L. 1983), did not "contain specific language which precludes its 

application to water rights perfected prior to July 1, 1973. Other 

provisions contained in the . . . Act do contain such preclusive 

language. Castillo, 642 P. 2d at 1025. Similarly, the statute 

governing changes in appropriation rights in this case, 5 85-2- 

402, MCA, also lacks language precluding its application to water 

rights perfected before July 1, 1973. 

"A retroactive law is one that takes away or impairs vested 

rights acquired under existing laws or creates new obligations or 

imposes new duties in respect to transactions already past. . . . 

Statutes that modify the procedure for exercising a vested right 

or carrying out a duty do not constitute retroactive legislati~n.~~ 

Castles v. State (1980), 187 Mont. 356, 360, 609 P.2d 1223, 1225. 

Section 85-2-402, MCA, merely modifies the procedure for exercising 

a vested right, and as such is not retroactive. 

Under our standard of review of questions of law, we review 

an agency decision simply to determine if the agency's 

interpretation of the law is correct. Steer, Inc. v. Department 

of Revenue (Mont. 1990), 803 P.2d 601, 603, 47 St.Rep. 2199, 2200. 
Here, the burden of proof is controlled by the statute, which 

clearly places the burden on the applicant. The District Court did 

not err in upholding the DNRC's interpretation of the statute. 

11. 

Did the District Court err in upholding the hearings 

examiner's refusal to hear evidence regarding the objectors' water 

rights? 

The Roystons contend that because they were precluded from 

showing the nature of the objectors' rights they were unable to 

demonstrate that the objectors' rights would be unaffected by the 

Roystons* change in place of use and change from flood to sprinkler 

irrigation. The Roystons contend that by failing to take evidence 

on these rights, it was impossible for the DNRC to properly assess 

adverse impact on those water rights according to the statute, and 

thus the Roystons were denied due process. 

This argument fails. The DNRC gave its reasoning for not 

accepting evidence of the objectors' water rights: 

Mistaken nonrecognition of an objector's right, and grant 

of a change authorization based thereon, could 

irreparably damage objector; while mistaken recognition 

of that objector's right and denial of a change 

authorization would maintain the status quo with no 

actual loss to anyone. 

The records of the objectors' water rights are set forth in the 

Water Court's temporary preliminary decree. The hearings examiner 

correctly concluded that the rights set forth in the decree were 

prima facie evidence that the objectors have water rights in the 

appropriated stream. See 85-2-227, MCA. The legislature 

provided a separate procedure in the Water Use Act by which the 

8 
Roystons could make a timely objection to the rights claimed by the 

objectors in Ross Fork Creek, when such rights were adjudicated by 

the Water Court and set forth in the temporary preliminary decree 

for that basin. See generally Title 85, Chapter 2, Part 2, Montana 

Code Annotated. To allow the Roystons to present evidence of the 

objectors' water rights could essentially lead to the readjudication of water rights claimed in Ross Fork Creek. The 

District Court did not err in upholding the hearings examiner's 

decision to use the temporary preliminary decree as prima facie 

evidence of the objectors' water rights rather than to allow the 

Roystons to present evidence of the objectors' water rights. 

111. 

Did the District Court err in holding that the objectors had 

standing to object to the application based upon the prima facie 

content of their claims? 

The Roystons argue that two of the objectors, Turner Ranch and 

Basin-Angus Ranch, did not have standing to object to the Roystons' 

application to change their senior water right. They contend that 

Turner lacks standing because only downstream appropriators whose 

rights are hydrologically connected to the applicant's right have 

standing to object to a change. 

This contention lacks merit. Generally, an appropriator with 

a water right in a particular source has an obvious interest in any 

water right granted from that source and thus has standing to 

challenge any water right granted in that source. Holmstrom Land 

Co. v. Newlan Creek Water District (1979), 185 Mont. 409, 425, 605 
P.2d 1060, 1069. An upstream junior appropriator can be damaged 

by a change in the amount of water appropriated downstream if a 

shortage ensues and a senior appropriator causes the junior to 

forego his water until the senior's rights are fulfilled. Thus, 

Turner ranch as an upstream junior appropriator has an obvious 

interest in any right granted in Ross Fork Creek. See, e.g., 

Holmstrom, supra. Basin-Angus also has an interest in any water 

appropriated in Ross Fork Creek as a downstream junior 

appropriator. 

The Roystons also argue that the issue of standing should have 

been certified to District Court. The Roystons do not argue that 

objector 0' Brien did not have standing to object under the statute. 

Since the Roystons did not challenge O'Brien, Inc.'s standing to 

object, any alleged error in allowing Basin-Angus Ranch and Turner 

Ranch to proceed in the same hearing using the same counsel, or 

refusing to certify the issue of standing to district court, is 

rendered harmless. The objection of O'Brien alone was sufficient 

to cause the matter to go to hearing. A reviewing court is 

precluded from modifying or reversing an agency's decision unless 

substantial rights of the appellant have been prejudiced. Section 

2-4-704 (2), MCA. The Roystons suffered no prejudice because BasinAngus and Turner were parties to the hearing. 

IV . 

Did the District Court err in determining that there was 

substantial credible evidence to support the DNRCls denial of the 

application for change? 
The Roystons argue that the record lacks substantial credible 

evidence to support the hearings examiner's decision. They contend 

that without evidence of the objectors1 water rights and their 

hydrologic relation to the Roystonsl rights, there is no 

substantial evidence of adverse impact controverting their 

evidence. The Roystons contend that the record indicates that 

their new sprinkler system would not divert any more water than 

what was historically consumed through flood irrigation. They 

further argue that while the District Court noted that there was 

no testimony regarding whether the sprinkler system could operate 

at decreased flows, there is no evidence in the record that the 

proposed sprinkler system would not work. They contend that the 

objectors1 expert in fact stated that the system could be operated 

at lower flows during periods of shortage and, therefore, that the 

record does not support the conclusion that their appropriation 

works were inadequate. 

The Roystons introduced evidence of their water Ifbanking" 

plan through the testimony of an expert witness. The objectorst 

expert testified that water "banking" may lead to wide-spread 

wilting of plants in areas previously saturated because there is 

a dense stand of plants competing for a very small amount of water. 

The expert also testified that water "banking" may be harmful to 

the land. 

The record indicates that high water periods occur yearly in 

Ross Fork Creek and are of variable, but generally short, duration. 

The record does not show the relative percentages of water, 
historically diverted but unconsumed, that evaporated, returned to 

Ross Fork Creek, or were lost to the creek through deep percolation 

or otherwise. The hearings examiner did find that due to the 

proximity to the creek of the acreage originally irrigated, most 

of the unconsumed water would have quickly returned to the creek, 

either on the surface or via subsurface routes under the original 

system of flood irrigation. The record indicates that because of 

the increased distance of the new places of use to the creek under 

the proposed sprinkler irrigation system that there would be 

significantly less immediate return flow to Ross Fork Creek. The 

record does not indicate how much immediate or delayed return flow 

would occur under the proposed system. 

Regarding the adequacy of the Roystonst proposed means of 

diversion, the hearings examiner found that the record did not 

indicate how the proposed sprinkler system could be operated at 

design flow rates during high water and then be modified or 

"nozzled down" to operate with substantially less flow later in the 

season. The hearings examiner further noted as a "recognized 

technical fact1# that there is a minimum flow below which water 

cannot be effectively applied even with such adjustments and that 

such threshold flows were not of record nor could they be 

determined from the record. 

Judicial review of an agency's decision is governed by the 

Montana Administrative Procedure Act (MAPA), 5 2-4-704, MCA. Under 

MAPA our review of an agency decision is narrowly defined: 

The court may not substitute its judgement for that of 

the agency as to the weight of the evidence on questions 
of fact. The court may affirm the decision of the agency 

or remand the case for further proceedings. The court 

may reverse or modify the decision if substantial rights 

of the appellant have been prejudiced because: 

(a) the administrative findings, inferences, 

conclusions, or decisions are: 

(i) in violation of constitutional or statutory 

provisions; 

(ii) in excess of the statutory authority of the 

agency ; 

(iii) made upon unlawful procedure; 

(iv) affected by other error of law; 

(v) clearly erroneous in view of the reliable, 

probative, and substantial evidence on the whole record; 

(vi) arbitrary or capricious or characterized by 

abuse of discretion or clearly unwarranted exercise of 

discretion; or 

(b) findings of fact, upon issues essential to the 

decision, were not made although requested. 

Section 2-4-704 (2) , PICA. The Roystons are essentially asking this 

Court to reweigh the evidence. The Roystons had the burden of 

demonstrating that granting their application would not adversely 

affect the rights of the objectors. The Roystons failed to meet 

their burden. The application was properly denied because the 

evidence in the record does not sustain a conclusion of no adverse 

affect to others and it cannot be concluded from the record that 

the means of diversion and operation of the appropriation works are 

adequate. The DNRCts decision was not clearly erroneous in view 

of the reliable, probative, and substantial evidence on the whole 

record. 
v. 

Are the Roystons entitled to attorney's fees pursuant to the 

private attorney general theory or another applicable theory? 

Because we have affirmed the DNRCfs decision in all respects, 

we need not reach this issue. 

The order of the District Court is 

AFFIRMED. 

We concur: / 

Chief Justice 
August 12, 1991 

CERTIFICATE OF SERVICE 

I hereby certify that the following order was sent by United States mail, prepaid, to the 

following named: 

Sarah Arnott Ozment 

Attorney at Law 

P.O. Box 1160 

Livingston, MT 59047 

James A. Hubble 

Christensen & Hubble 

P.O. Box 556 

Stanford, MT 59479 

Donald MacIntyre 

Dept. of Natural Resources 

1520 E. Sixth Ave. 

Helena, MT 59620 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA