No. 13367 INTHE SUPREME COURT OF THE STATE OF MONTANA 1976

MONTANA DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION, Plaintiff and Appellant,

INTAKE P7ATER COMPANY, a Delaware Corporation, Defendant and Respondent.

Appeal from: District Court of the Seventh Judicial District, Honorable Thomas Dignan, Judge presiding. Counsel of Record: For Appellant: Eoone, Earlberg and Haddon, Missoula, Montana Sam E. Haddon argued and William T. Boone appeared,

Missoula, Montana Ted Doney appeared, Helena, Montana Robert T. Cumrnins appeared, Helena, Montana For Respondent: Loble, Picotte and Pauly, Helena, Montana Henry Loble argued and Peter IT. Pauly argued.,

Helena, J"intana Boyd L. Henderson appeared, Houston, Texas

Su.bmitted: October 28, 1976

Filed:

### Mr. Justice Frank I. Haswell delivered the Opinion of the Court.

TheMontana Departmentof Natural Resources and Conservation filed an action seeking a declaratory judgment that Intake Water Company does not have a valid appropriationof 80,650acre feet per year of the waters of the Yellowstone River and enjoining Intake from use of the water. Intake counterclaimed for a declaratory judgment that it has complied with Montana water appropriation statutes to date and upon continued diligent prosecution of the excavation and constructionof the diversionworks to completion, it is entitled to relate the priority of its appropriationback to June 8, 1973. The district court, Dawson County, the Hon. Thomas Dignan, district judge presiding without a jury, entered judgment in favor of Intake. The Departmentof Natural Resources and Conservationappeals. Plaintiff and appellant is the Montana Department of Natural Resources and Conservation (DNR), an administrative agency of the State of Montana created pursuant to Chapter 15, Title 82A, R.C.M. 1947,whose duties include the administration ofwater use laws. Defendant, counterclaimantand respondent is IntakeWater Company (Intake),a Delaware corporation and wholly owned subsidiary of Tenneco, Inc. Intake is authorized to do business in Montana and its corporatepowers include the right to appropriate waters, acquirewater rights,and sell the water to customersand users in the manner of a private water company, including the constructionof dams, reservoirs and water transmission facilities. The subjectmatter of this litigation is a project by Intake involving the appropriationof 80,650acre feetper year of the waters of the Yellowstone River near the community of Intake in Dawson County,Montana. A diversion facility is to be constructed on land owned by the United States whereby waterwillbe pumped outof the river, conveyed by pipelines toan off-stream storage reservoir, and from theredistributed by pipelines tothe servicearea. Intake intends to sellthe water toitscustomers for irrigation, industrial, municipal and domestic use. The service area or area of intended use of the appropriated waters areportions of Dawson and Wibaux Counties inMontana and

a portion of Golden Valley County, North Dakota. The service

area lies generally ina southeasterlydirection from thepoint of diversion some 30 miles. This area contains largecoal reserves which form a largepart of thewater demand for theproject. The sizeof the service area was primarily determined by the extentof usable coal reserves. DNR claims that the intended use of the appropriated waters isprimarily for a coal gasification plant for theproductionof synthetic gas to supplement declining natural gasreserves. Jack Tindall, generalmanager of Intake and an officialof Tennessee GasTransmission Company, a Tenneco subsidiary, which isa major natural gas pipeline system that suppliesgas toits customers, testified that he became involved inthe Intake project because Tenneco and its subsidiarieswere looking for alternate suppliesof natural gas and water isneeded toconvert coal togas. While denying thatTenneco or its subsidiaries had any specificplans toconstruct a coal gasification plant atthe time of trial, he admitted theywereworking on it and that Tenneco and its subsidiaries could be one of the industrial customers forwater from the Intake project. Tindall testified thathe made the determination of the amount of Intake's appropriation-- 80,650 acre feetper year--by the amount needed toutilize the coal inthe area of intended use (64,000-65,000 acre feetannually) plus other uses and losses thatwould bring the total to80,650 acre feetper year. The off-stream reservoir involved inthe projectwill be approximately 25,000 acre feet incapacity and willinundate approximately 700 acres of land. The purpose of thisreservoir istopermit diversion of theriverwaters during periods of surpluswaters and storageof such waters foruse during the periods of lowwater intheriver. This system, it isclaimed, willminimize the impact of thediversionon theriver itself and insuretheavailabilityof water forprior appropriators and users downstream. There isan existingdam thatcreatesa backwater in theriver atthe diversion sitewhich permits the taking of water without the costand environmental consequences of constructing another diversion dam across theriver. The project contemplates removal of waters from the Yellowstone River basin and saleof some of thesewaters outside thebasin inNorth Dakota. Such removal requires unanimous consentof Montana, North Dakota and Wyoming under ArticleX of theYellowstone River Compact and requires consent of theMontana legislatureunder section 89-846, R.C.M. 1947. Neither consent has been secured todate. Intakecommenced an action infederal court inJune, 1973tohave section 89-846 and ArticleX of the Yellowstone River Compact declaredunconstitutional. (Civil Docket No. 1184, United StatesDistrict Court for the District Court of Montana, BillingsDivision). This suithas not been concluded todate. According tothe testimony of Jack Tindall, generalmanager of Intake, theproject would stillbe economically feasible if industrialusers wereexcluded and only agricultural, municipal and recreational users remained provided these latter users could pay the price toprovide a fairreturn on the capitalexpended for the project. There is no substantial evidence indicatingwhether theproject would remain economically feasible if users outsidethe Yellowstone River basin were excluded. On June 29, 1973 Intake commenced a suitin statecourt seeking determination of whether it must comply with the provisions of theMontana Major Facility SitingAct (Ch. 8, Title 70, R.C.M. 1947, as amended) inconstructing itsdiversion works for appropriation of thewaters of the Yellowstone River. (Civil Docket 36907, districtCourt, firstjudicial district, Stateof Montana, Lewis and Clark County.) This suitremains unresolved todate.During theperiod since inception of theproject in November, 1972 through September, 1975, Intake has expended $331,700.39 on site-related activities, engineering, market studies, environmental activities, legal fees and administrative expenses directlyattributable toconstructionof theproject. On June 8, 1973 Intake posted itsnotice of appropriation of thewaters atthepoint of intended diversion and filednotices of appropriation thereafter with the county clerk ineachMontana county through which theYellowstone River flows asrequired by section 89-810, R.C.M. 1947. Thereafter Intake took the following identifiable action inthe 40 day period following June 8pursuant to section 89- 811, R.C.M., requiring the appropriators to 

### " 

## * * * proceed to prosecute the excavation or construction of thework by which thewater appropriated is tobe diverted

## * * *": (1)Inaddition to filing copies of the notice of appropriation with thevarious county clerks and recorders, Intake filed copies of the noticewith the director of DNR and theNorth Dakota StateWater Commission. (2) Intake selected, staked and flagged locations for fivetesthole borings atthe siteof the proposed diversion

### works to test subsurface soil conditions. (3) 

### Intake hired a Billings testing laboratory to make the test hole borings and went to the site twice with them to accomplish the same. (4) Secured a license from the Bureau of Reclamation to construct, operate and maintain a pumping plant at the proposed diversion site. (5)Filed and proceeded to prosecute the state court suit to determinewhether Intakemust comply with the Montana Major Facility Siting Act with respect to construction of its diversionworks. (6)

### Filed and proceeded to prosecute the federal court suit to determine the constitutionalityof section 89-846 and Art. X of the YellowstoneRiver Compact. (7)

### Contacted environmental consultants and governmental agencieswith respect to required environmental work on the project.(8)Continued the ongoing drafting of preliminary engineering plans for constructionof the diversionworks. (9)Continued the ongoing selection,pricing and availability of equipment for the diversionworks. (10)Continued the ongoing legal and administrativework necessary to constructionof the diversion works and completion of the appropriation. (11) Commenced and continued preparation of the design drawings of the diversionworks. Following this 40day period up to the time of trial, Intake sponsored a paddlefish study proposed by the Montana Fish and Game Department at a cost to Intake of $5,000;defended the instant suit;hired an environmental consulting firm in Billings to conduct an environmental literature search at a cost to Intake of $4,000; hired an engineering firm in Billings to conduct a

### preliminary engineering survey of the proposed diversion including hydrology studies,a recommended operating plan, and identificationof threepotential locations for an off-stream reservoir;hired a Houston, Texas firm to perform topographic mapping including topographic contours of 61,660acres of land in the vicinity of Intake to enable Intake to select reservoir sites, pipelines, and aqueduct routes at a cost to Intake of $8,011.77; hired a Denver,Colorado firm to conduct a water marketing study of the demand of water for industrial use in the area of contemplated use; sponsored a study of the aquatic invertebrate life in the Yellowstone River at the request of the Montana Fish and Game Department at a cost to Intake of $50,000;hired a Billings firm to conduct a water demand study for agricultural,municipal and ruraldomestic use in the contemplated area of use, and secured cross-section data of the profile of the river channel at the point of diversion, took water meter readings, and established a velocity distribution

curve. Future contemplated activities leading to eventual completion of constructionof the project and the impoundmentof water in the reservoir in January, 1982 include survey and geological investigation of the three potential reservoir sites; socio economic data gathering; review ofmitigating measures; climatic and water quality studies; environmental air quality studies;/migratory waterfowl, vegetation and wildlife studies;preparation of an environmental impact report for use by the Bureau of Reclamation,U. 

### S. Department of the Interior, in preparing their environmental impact statement

as required by National Environmental Policy Act and the terms of Intake's license; selectionof a reservoir site; final engineering design of the diversion work; updating hydrological studies, water market and water demand studies;historical and archaelogicalstudies;procurement of a construction permit from the U. S. Army Corps of Engineers; formulationof operating and maintenance plans for the reservoir and diversion works; various activities in connection with the environmental impact statement, public hearings and adoption; land acquisition for the reservoir site; resurveys as necessary; negotiation of water sale contracts; actual construction of the diversionworks and reservoir by the contractor; completion of the two pending lawsuits in federal and state court; additional legal and administrative work involved in the completion of construction of the project. Cost estimates on the project vary depending on the location of the off-stream reservoir, the pipeline distance from the diversion site and the diversion site. Three cost estimates were made depending onwhich of three reservoir sites

was ultimately selected. These estimatesvaried from a low of $12,753,000 to a high of $22,326,000, depending on location of the reservoir site. The projected schedule at the time of trial for these future activities contemplated a final environmental impact statementby the Bureau of Reclamation in the spring of 1979; the commencement of constructionby the contractor in mid-summer of 1979 and completion of construction about 2-1/2 years later; and impoundment of water in the off-stream reservoir in January, 1982. The instant suit was filed by DNR against Intake on September 

### 7, 1973. Following completion of pleadings and pretrial discovery, the case was tried in November, 1975. On January 8, 1976 the district courtmade and filed extensive and detailed findings of fact and conclusions of law. A judgment and decree based on these findings and conclusionswas entered

on the same date. The judgmentprovided in summary that:(1) Intake fully complied with legal requirements in posting and filing its Notice of Water Right Appropriation

on June 8, 1973. (2) Intakeproceeded to prosecute the excavation or construction of the diversionworks within 40 days after June 8, 1973 pursuant to section 89-811, R.C.M. 1947. (3)All of Intake's activities up to the time of trial constituteprosecution or construction of the work by which the water is to be diverted with reasonable diligence and which, if prosecuted with reasonable diligence to completion,entitles Intake to relate back the priority of its appropriation to June 8, 1973.

### (4)In the event it is ultimately determined in the state court suit that Intake must comply with the provisions of theMontana Major Facility Siting Act of 1973, any conforming actions taken by Intake constitutes prosecution or construction of the work by which the water appropriated is diverted which if prosecuted with due diligence to completion, entitles Intake to relate back the priority of its appropriation to June 8,1973. (5) Intake's appropriation of June 8, 1973 is complete

as of that date to the full amount of water its facilities are capableof diverting up to 80,650 acre feetper year for sale and distribution to users for agricultural, industrial, municipal and domestic purposes when its off-stream reservoir and diversion works are completed and Intake is ready and willing to deliver water to users and offers to do so. DNR has appealed from this judgment and sets forth three issues for review on appeal: 

### (1)Is Intake the owner of a valid appropriation of 80,650 acre feet per year of the waters of the Yellowstone River

as of June 8, 1973?(2)Did Intake comply with section 89-811,requiring that it proceed to prosecute the excavation or construction of the work by which thewater appropriatedwas to be diverted within 40days of posting of its notice of appropriation? (3) Do considerationsof equity and public policy preclude Intake from claiming an inchoate right to appropriate 80,650 acre feet per year of the waters of the Yellowstone River? The contentionsof the respective parties illuminate the underlying determinations we must make in this appeal. DNR basically claims that Intake is not the owner of an existing appropriation right at all because such right cannot come into being until all statutory requirementsaremet and construction is completed; that Intake has lost whatever inchoate rights it may have acquired by posting and filing its notice of appropriation on June 8, 1973 by its failure to 

### " 

## * 

## * * proceed to prosecute the excavation or construction of the work by which thewater appropriated is to be diverted 

## * * *"within 40days after posting its notice of appropriation; that because of a number of legal and practical hurdles thatmust be overcome in order to construct the project which are totally beyond Intake's ability to control, and because constructionwill take years to complete, considerations of equity and public policy preclude entry of an open ended decree wherein the fate of over 80,000acre feet per year of the water of the Yellowstone River will remain unknown and in a state of limbo for many years. Intake,on the other hand, contends that it is the owner of an existing right by virtue of the posting and filing of its notice of appropriation on June 8, 1973 and its various activities both before and after that date; that itdid in fact 

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## * * 

## * proceed to prosecute the excavation or construction of the work by which the water appropriated is to be diverted 

## * 

## * *"within 40

### days after posting its notice of appropriation; that it has at all times 

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## * * * prosecute[d] the samewith reasonable diligence

## * * *" toward completion;and that despite the number of legal and practical hurdles itmust overcome to actually complete construction of the project, it is entitled to try to surmount these and as long as it proceeds with reasonable diligence to that end, its right to "relationback" of its priority of appropriation to June 8, 1973 is not lost. We note that as a practical matter Intakeposted and filed its notice of appropriation some 22 days before Montana's

new Water Use Act of 1973 became effective;and unless the statutory requirements then existing have been and are met by Intake, it is not entitled to relate the priority of its appropriation back to June 8,

### 1973 and becomes subject to the provisions of the Water Use Act of 1973. We do not suggest that Intake is subject to criticism in doing this or that Intake was motivated by this consideration. In fact the evidence shows that the inception of the project occurred in November, 1972before the 1973 legislature evenmet. We simply note the existence of this situation to place thepresent controversy in perspective. We further observe that the issues on appeal fundamentally involve the existence and nature of the right acquired by Intake by virtue of its activities to the date of trial. An overview of the Montana law on appropriation of water and the establishment of water rights and their priority is desirable at the outset. The statutory law in this area is essentially contained in three statutes: "89-810.Notice of appropriation.Any person hereafter desiring to appropriate the waters of a 

### river,or stream, ravine, coulee, spring, lake, or other natural source of supply concerning which there has not been an adjudication of the right to use the waters, or some part thereof,must post

### a notice in writing in a conspicuousplace at thepoint of intended diversion, stating therein: "1. The quantity of water claimed,measured as hereinafter provided; "2. 

### The purpose for which it is claimed and place of intended use; "3. 

### The means of diversion, with size of flume, ditch, pipe, or aqueduct,by which he intends to divert it; 

### "4. The date of appropriation; "5. 

### The name of the appropriator. "Within twenty days after the date of appropriation the appropriator shall filewith the county clerk of the county inwhich such appropriation ismade a notice of appropriation,which, in addition to the facts required to be stated in the posted notice, as hereinbefore prescribed, shall contain the name of the stream fromwhich the diversion is made, if such stream have a name, and if it have not, such a descriptionof the stream as will identify it,and an accurate description of the point of diversion of such stream, with reference to some natural object or permanent monument. The notice shall be verified by the affidavit of the appropriator or some one in his behalf, which affidavitmust state that the matters and facts contained in the notice are true. "89-811. Diligence in appropriating. Within forty days after posting suchnotice, the appropriator must proceed to prosecute the excavation or construction of the work by which the water appropriated is to be diverted, and must prosecute the samewith reasonablediligence to completion. If the ditch or flume, when constructed, is inadequate to convey the amount of water claimed in the notice aforesaid, the excess claimed above the capacity of the ditch or flume shall be subject to appropriation by any other person, in accordancewith the provisions of this chapter. "89-812. Effect of failure. A failure to comply with the provisions of this chapter deprives the appropriator of the right to the use of water as against a subsequent claimant who complies therewith, but by complyingwith the provisions of this chapter the right to the use of the water shall relateback to the date of posting the notice." The parties to this litigation apparently concede that what constitutes compliancewith the statutory requirement that the appropriator must 

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## * * 

## * proceed to prosecute the excavation or construction of the work 

## * * *"within 40

### days after postingthe notice of appropriation under section 89-811 has never been the subject of direct interpretation by this Court. DNR relies on the language of the statute, dictionary definitions of the words used, analogies drawn from Montana cases and those from other states interpreting statutes relating to oil and gas drilling operations,water wells, and priorities under mechanics lien laws to support its contention that Intake's activities were at most preliminary work and do not rise to the level of excavation or construction of the work by which the water is to be diverted. Intake, on the other hand, equally relies on the statutory language, contends itmust be reasonably applied in view of the magnitude of the project and the legal and practical hurdles thatmust be overcome, and refers us to a number of Colorado caseswherein similar decrees to that entered in the instant case have been granted to provide the necessary assurances in multi-million dollar projects of great magnitude, complexity and completion time. See Taussig v. Moffat TunnelWater & Development Co. (1940) 106 Colo. 384, 106 P.2d 363;Metropolitan Suburb. Water v. Colorado River Water (1961) 148 Colo. 173, 365 P.2d 273; Four CountiesWater Users Ass'n v. Colorado River Water C.D. (1966) 159 Colo. 499, 414 P.2d 469; Colorado River Water Conservation Dist. v. Twin Lakes R. & C. (1970)171 Colo. 561, 468 P.2d 853;Elk-Rifle Water Company v. S. 

### H. Templeton (1971) 173 Colo. 438, 484 P.2d 1211; ColoradoWater Cons. Dist.

v. Twin Lakes R. & C. Co. (1973)181 Colo. 53, 506 P.2d 1226. Continuing with our overview,one further statute and

an administrative regulation relating to the existence and nature of Intake's rightmust be noted. Section 89-867(4), R.C.M. 1947

as amended, defines an "Existingright"under the Montana Water Use Act of 1973 in this language: "(4) 'Existingright'means a right to the use ofwater which would be protected under the law as it existed prior to July 1, 1973." A rule of DNR, codified as section 36-2.14J(1)-S1400 of the Montana Administrative Code, furtherprovides: 

### " (e) "Existingright', in addition to the definition given the term by section 89-867(4) of the Act, includes any appropriation of water commenced prior to July 1, 1973, if completed according to the law as it existed when the appropriationwas begun." One further matter ismaterial to an overview of this appeal. The findings of fact and conclusionsof law of the district court contain this recital: "Upon conclusion of the trial of this case, and in response to an inquiry from the court, counsel for the plaintiff, Mr. Chronister, conceded that defendant had proved that it had posted its Notice of Water Right Appropriation for Posting and filed its Notice of Water Right Appropriation for Filing in accordance with the provisions of Section 89- 810,R.C.M. 1947,and related statutes,and that Intakehad prosecuted excavation or construction of thework by which thewater is to be diverted with reasonable diligence at all times since expiration of the forty (40)day period specified in Section 89-811,R.C.M. 1947,and to the date of trial hereof. Mr. Chronister stated that the only remaining issue is the contention of the plaintiff that the defendantdid not commence to prosecute excavation or construction of thework by which the water is to be diverted within forty (40)days after posting of the Notice of Water Right Appropriation for Posting as required by the provisions of Section 89-811,R.C.M. 1947." We now direct our attention to the first issue on appeal, viz., is Intake the owner of a valid appropriation of 80,650

acre feet per year of the water of the Yellowstone River as of June

The statutory requirements for a valid appropriation are: (1)Posting a written notice of appropriation at the point of intended diversion. Section 89-810. (2)Filing the notice of appropriation with identification of the stream and point of diversion. Section 89-810. (3)The appropriator must proceed to prosecute the excavation or construction of the work by whichthe water appropriated is to be diverted within 40days after posting notice of the appropriation. Section 89-811. (4)~he appropriator must therealfter prosecute suchwork with reasonable diligence to completion. Section 89-811. If the appropriator completes the appropriation according to statute, the right to the use of the water relatesback to the date of posting notice of the appropriation. Section 89-812. Completion of all these steps is necessary to a complete appropriation. Bailey v. Tintinger, (1912), 45Mont. 154, 122 P. 575. A declarationof appropriation,unaccompanied by construction of a diversion works and actual diversion of the water, is insufficient. Miles v. Butte Electric and Power Company (1905) 32 Mont. 56, 79 

### P. 549. Thus the posting and filing of the notice of appropriation is a condition precedent to a valid appropriation, and a valid appropriation does not exist without completion of the work and actual diversion of the water. However, Intake is the owner of an "existing right" as that term is defined in the Water Use Act of 1973 and the Montana ~dministrativeCode for the reasons and under the authority of GeneralAg. Corp. v. Moore, 166Mont. 510, 534 P.2d 859. There

we held that priority of appropriation of water is a valuable rightwithin the meaning of Article IX, Section 3, 1972Montana Constitution,recognizing and confirming all existing rights to the use of any waters for any useful or beneficial purposes and that the Water Use Act of 1973 discloses a legislative intent consistent with this Constitutional provision. In General Ag. Corp. we held that "use" is not limited to perfected or actual

use but that the inception of the existing right occurs when the first step is taken to establish such use, otherwise the existing right of priority of appropriation would be nullified. Nonetheless the "existingright"possessed by Intake isnot synonymouswith a valid appropriation. What Intakepossesses is essentially an uncompleted appropriation. Its "existing right"will not ripen into a valid appropriation until the remaining statutory requirements for a completed appropriation are met. No valid appropriation is yet in existence. Accordingly

we hold that at this time Intake is not the owner of a valid appropriation of 80,650 acre feet per year of thewaters of the Yellowstone River as of June 8, 1973. The principal battleground at the trial was whether Intakehad complied with section 89-811,R.C.M. 1947,requiring that it 

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## * * 

## * proceed to prosecute the excavation or construction of the work by which the water appropriated is to be diverted 

## * 

## * *"within 40 days after posting the notice of appropriation on June 8, 1973. This was stated by DNR's counsel at the beginning of the trial to be the only issue in DNR's case. At the conclusionof the trial counsel for DNR conceded that Intake had proved posting and filing of the notice of appropriation in accordance with section 89-810 and that Intakehad prosecuted excavation or construction of the work by which the water is to be diverted with reasonablediligence at all times since expiration of the 40 day period specified in section 89-811 to the date of trial. The focus of this issue is themeaning of the words 

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## * * * proceed to prosecute the excavation or construction of thework 

## * 

## * 

## *". In construing a statute, the intention of the legislature is controlling. Section 93-401-16,R.C.M. 1947. The intc:ntionof the legislaturemust first be determined from the plain meaning of the words used, and if interpretation of the statute can be so determined, the Courtmay not go further and apply any other means of interpretation. Keller v. Smith, Mont. 

## , 533 P.2d 1002, 33 St.Rep. 828;Dunphy v. Anaconda

### Co., 151Mont. 76, 438 P.2d 660,and cases cited therein. The wands employed are to be given their ordinary and popular meaning unless the context or usage indicates otherwise. Beer R. P. Ass'n v. State Bd. of Equalization, 95Mont. 30, 25 P.2d 128; Burritt v. City of Butte, 161Mont. 530, 508 P.2d 563. Both parties concede that this Court has not heretofore been called upon to construe the meaning of the statutoryphrase in issue here. Both rely on dictionary definitions,drawing analogies from cases from other states construing their requirements and extrinsic indications of various kinds. Fundamentally, DNR contends that the statutory phrase requiresactual on-site excavation or construction within 40days of posting notice of appropriation and that drilling 5 

### test holes along a tentative pipeline to determinewhether the diversion site selected is capable of supporting the diversion works does not qualify. Intake, on the other hand, contends that all of its activities during the 40day period are part of its ongoing program to construct the project and that the legal and practical constraints

on its activities by environmental requirementsof theNational Environmental PolicyAct, the Yellowstone River Compact and section 89-846,R.C.M. 1947,Montana's Major Facilities Siting Act, the terms of its license from the Bureau of Reclamation, and prudent engineering and financial practices in a project of this size, complexity and magnitude preclude actual on-site excavation and construction of the diversion works within the 40day period. "Proceed" is defined inWebster's New Twentieth Century Dictionary (2ded), in thismanner: "TOmove, pass or go, forward or onward; to advance; 

## * 

## * * to continue or renew motion or progress; as to proceed on a journey; to proceed with an argument.

"To go on in an orderly or regulatedmanner, tobegin and carry on a series of acts or measures; to act by method; to prosecute a design; as,to proceed on sound principles." "Prosecute" is defined in the same dictionary as: "To follow or pursue with a view to reach, execute or accomplish; to carry on; to continue; to follow up; to go or proceed with; as to prosecute a scheme, hope or plan." Application of these dictionary definitions goes only part way in interpreting the meaning of the statutoryphrase. It can fairly be said that selection, staking, flagging, and drilling of the 5 test hole borings at the site of the diversion works; the securing of a license from the Bureau of Reclamation to operate and maintain a pumping plant at the diversion site; the filing and prosecution of the suit in state court to determine if Intake must comply with the Montana Major Facility Siting Act and the federal suit to determine the constitutionality of section 89-846,and Article X of the Yellowstone River Compact; the ongoing drafting of preliminary engineering plans for construction of the diversion works, the environmental contacts, the selecting, pricing and availability of equipment for the diversion works, and the ongoing legal and administrative work indicate that Intake

was proceeding to prosecute the project during the 40day period. But these dictionary definitions shed no light on whether actual on-site excavation or construction is required in the 40day period. We note that the legislature used the phrase "proceed to prosecute" rather than "commenceactual excavation or construction". Section 89-811was first enacted in 1885 in territorial days prior to statehood. While it may have been the common practice in those days to post the notice of appropriation,hitch the horse to a ditcher, run a ditch and actually apply water to

a beneficial use within 40 days, the early settlers foresaw irrigationprojects of greater magnitude and used the statutory

### language that still exists. This same statutory languagehas been retained and reenacted in 1887, 1895, 1907,1921 and continuesunchanged to the present time. If the legislaturehad intended to require actual on-site excavation or construction it could easily have said so as it did in section 89-121,R.C.M. 1947, relating to storage, diversion and control of unappropriatedwaters by the State Water Resources Board, the predecessor of DNR. Section 89-121, R.C.M. 1947,authorized the State Water Resources Board to initiate rights to the use of waters by executing a declaration of intent to store, divert or control the unappropriated waters of a particular body, streamor source. Such

### a declaration was to have

a priority of right as of the date of recording of the declaration with the county clerk and recorder 

### " 

## * * * provided the means of actual appropriation shall be commenced by actual work of construction within four (4)years from the date of original recording. 

## * * *" (Emphasissupplied.) A 

### statutemust be given a reasonable construction consistent with its purpose. Keller

### v. Smith, supra and authorities cited therein. The purpose of section 89-811 is to require reasonable diligence in completing the appropriation or forfeitureof the priority of the appropriation as of the day of posting the notice of appropriation. What constitutes reasonable diligence must be determined on an ad hoc, case-by-casebasis. The law in this area is summarizedby a leading authority, Clark, Waters & 

### Water Rights,Vol. 6, 

### 5514.1, pp. 

### 308, 309, in this language: "What constitutesdue diligence is a question of fact to be determined by the court in each case. Diligence does not require unusual or extraordinary effort,but it does require a steady application of effort--that effort that isusual, ordinary and reasonable under the circumstances. 

## * * * So long as the applicant prosecutes the construction of works in good faithwith a steady effort, he should be held to

### have prosecuted with diligence." In thepresent casewe have a multi-million dollar project of great complexity and magnitude thatwill require severalyears to complete. Removal of actual and potential legal constraints arising out ofArticle X 

### of the Yellowstone River Compact, section 89-846,and Montana's Major Facility Siting Act are in progress. Actual on-site construction of the diversion works cannot be prosecuted until the environmental requirementsof the National Environmental Policy Act are completed and the consent of the United States is obtained under the terms of Intake's license. Ordinary and prudent engineering practices require much preliminary engineering work to be completed before actual construction of the project is undertaken,bids are let,and the contractormoves in. Itwould be sheer folly to commence the actual excavation and construction of the diversion works before completionof these prior steps which is impossible within the 40 day statutoryperiod following posting of notice of appropriation. DNR refers us to several cases from Montana and elsewhere by way of analogy in support of its contention that commencement of actual construction of the diversionworks within the 40day statutoryperiod is required. Solbergv. SunburstOil & 

### Gas Co., (1925),73 Mont. 94, 104, 235 P. 761, interprets the phrase "commencing drilling operations" in an oil and gas lease to 

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## * * * denote unmistakably the firstmovement of the drill in penetrating the ground. 

## * * *I1 

### and work preliminary thereto did not constitutecompliance. State of Arizona v. U. 

### S. Land Company (1966),3

### Ariz.App. 167, 412 P.2d 736, involved interpretation of the words "substantiallycommenceduin Arizona's Water Code dealingwith construction of ground water wells and held that preliminary work was insufficient compliance. Rupp v.

### Earl H. Cline & 

### Sons, Inc. (1963), 230Md. 573, 188A.2d 146, 1ALR3d 815,dealt with priorities under Maryland'smechanic's lien laws after constructionhas commenced and held that "commencement of a building" meant actual construction with a present intention to continue the work until completion of the building. North Shaker Boulevard Co. v. HarrimanNat. Bank, (1924) 22 Ohio App. 487, 153 N.E. 

### 909,held that the digging of a test hole was insufficient compliance with the statutory requirement that "work,construction and improvementswere begun" under Ohio's mechanic's lien statute. Arkansas Power & 

### Light Co. v. Federal Power Com'n, (1942), 125 F.2d 982,held that a federal power licensee who was required to commence actual construction of a project within a specified period had not complied with the terms of his licenseby excavating several thousand yards of dirt, clearing,grading, surveying,and construction of a road

as this was simply preliminary work incidental to the actual construction and not a part of actual construction. We do not consider these attempted analogies in point concerning interpretationof the Montana statute. They involve entirely different statutory language under statuteswhose purpose is dissimilar from that of our statute. Under these circumstances,we fail to seehow they aid in interpreting and construing themeaning of our statutory language. We hold therefore that the meaning of the words 

### " 

## * * 

## * proceed to prosecute the excavation or construction of the work by which the water appropriated is to be diverted 

## * * *" is not confined to the commencementof actual on-site excavation or construction of the diversion works, but that it encompasses the steady on-going effort in good faith by Intake to prosecute the construction of the project under the circumstances disclosed here. The final issue iswhether equitable and public policy



### - 21 

### -considerations preclude Intake from claiming an inchoate right to appropriate 80,650 acre feetper year of thewaters of the Yellowstone River. The gist of DNR's argument on this issue, as we understand it, is that the judgmenthere constitutes a judicial stamp of approval of Intake's project for an indefiniteor open-ended term of years; that the judgment is contrary to the letter and spirit of prior and existing water law of this state in that it places in a state of limbo the rights of the people of Montana and subsequent appropriators to the beneficial use of over 80,000 acre feet per year of thewaters of the Yellowstone River; that Intake's project is contrary to public policy and should not be approved because of the substantialnumber of legal and practical hurdles thatmust be overcome to make thisproject a reality which render it highly speculative, indefinite and uncertain and further that the intended use of the water is contrary to the purposes of the Yellowstone River Compact; and that the entry of similardecrees in Colorado is not in point because Colorado statutes authorizing conditional decreeswith periodic judicial review have no counterpart in Montana. Intake's contentions, on the other hand,Arethat DNR's

concern over the effect of the judgmenton the people of Montana and subsequent appropriators is unwarranted because the amount of the appropriation amounts to less than 1% of the mean annual flow of the river at the point of diversion and there would be a negligible effect on the river itself and subsequent appropriators and in realitywould benefit the people of Montana by putting a small portion of the 8.8 million acre feet of surpluswaters of the Yellowstone River to beneficial use; that the validity of Intake's appropriation is not in limbo for an indefinite and open-ended term because Intake has an existing right from June 8,1973 under General Ag. Corp. 

### v. Moore, 166 Mont. 510, 534 P.2d 859; that while a number of legal and practical hurdles exist before Intake's project can become a reality, such considerationsdo not render the project so indefinite and speculative as to strike down the project from the outset and preclude Intake's efforts to complete it; that Intake is entitled to litigate the constitutionalityof the Yellowstone River Compact; and that the Montana Declaratory Judgment Act furnishes sufficient legal foundation for entry of the judgmenthere without specific authorization for conditional water decrees as in Colorado. The direct answer to this issue is that there is nothing illegal, inequitable,or contrary to public policy so as to preclude Intake from claiming a right to appropriate 80,650 acre feet of water per year of the waters of the Yellowstone River. Intake has an existing right for the reasons and under the authoritiespreviously cited. While this existing right does not constitute a valid and completed appropriation, it entitles Intake to pursue its project with reasonable diligence to that end for the reasons and under the statutes and case law heretofore discussed. The fact that final determination of the validity of Intake's appropriation may be years away does not place the rights of the people of Montana or subsequent appropriators in limbo for an indefinite and open ended term to any greater extent here than in any other case involving a multimillion dollar project of great magnitude and complexity which is clearly not prohibited. Intake, as well as any other person

or business organization,has the right to litigate the constitutionality of any law includingArt. X of the Yellowstone River Compact, section 39-846, R.C.M. 1947, and the applicability of the Major Facility SitingAct. Considerations of equity andpublic policy in no way preclude this. The Montana Declaratory JudgmentAct authorizes the instant action. Itprovides in pertinent part in section 93-8902,R.C.M. 1947: "Any person 

## * * 

## * whose rights, status or other legal relations are affected by a statute

## * * * may have determined any question of construction or validity arising under the

## * * * statute

## * * * and obtain a declaration of rights, status or other legal relations thereunder." It further provides in section 93-8912,R.C.M. 1947: "This act is declared to be remedial; its purpose is to settle and to afford relief from uncertainty and insecurity with respect to rights, status and other legal relations;and it is to be liberally construed and administered." Paragraphs numbered 1, 2 and 3 of the Judgmentand Decreedo this precisely. They adjudicate Intake's rights and status in relation to its proposed project and activities to the date of trial under Montana water appropriation statutes. However, paragraphs numbered 4 and 5 of the Judgment and Decree go considerablybeyond this and must be stricken. Paragraph 4 provide&: "4. In the event it is ultimately and finally determined in the action now pending in Lewis and Clark County,Montana, Civil DocketNo. 36907, or any appeal stemming therefrom, that Intake is subject to and must comply with the provisions of the Montana Major Facility Siting Act of 1973, as amended, in the construction of its diversionworks on the Yellowstone River in Dawson County,Montana, any actions taken by Intake to comply with the provisions of the Montana Major Facility Siting Act of 1973, as amended, shall constitute prosecution of construction of the work by which the water appropriated June 8, 1973, is to be diverted, which, if prosecuted with reasonable diligence to its completion entitles Intake to relate back the priority of its appropriation of the waters of the Yellowstone River in Dawson County,Montana, to the date of posting of the Notice of Water Right Appropriation for Posting under Sections 89-811and 89-812, R.C.M. 1947, to-wit: June 8, 1973." This provision purports to adjudicate Intake's rights and status under a future hypothetical contingency thatmay ormay not

### occur. Itdoes not requirediligent prosecution of the action to completion by Intake. It grants to Intake a "carteblanche" for any actions itmay take thereafter to comply, without definition or limitation, without regard to reasonableness,and under unknown facts thatmay occur or circumstances thatmay exist in the future. A determination of whether Intake, following the date of this trial, has continued to prosecute its projectwith reasonable diligence is a question of factunder the authoritiespreviously cited. That determinationmust be made

on the basis of known and proven facts at the time of trial, in such context, and under the totality of facts and circumstances then existing. It cannot and should not be adjudicated at this time

# . Paragraph 5provides: "5. Intake's appropriation of June 8, 1973, is complete as of June 8, 1973 to the full amount of water its facilities are capable of diverting from the Yellowstone River, (butnot exceeding 80,650 acre feet per year), for sale,rent or distribution for agricultural, industrial,municipal and domestic purposes, (andfor each of such purposes), when its diversion works and off-stream reservoir are completed,and Intake is ready and willing to deliver water to users upon demand and offers to do so." The same comments apply to this paragraph. In addition, the language of thisparagraph can be interpreted as granting Intake an accrued appropriation as of June 8, 

### 1973 by use of theword "is"rather than "willbe". As previously discussed, Intake simply possesses an uncompleted appropriation at this time. What has been decided here today is that Intakehas complied with Montana water appropriation statutes to the date of trial and upon completion of compliance with statutory requirements, Intake's "existingright" of priority of appropriation will ripen into 

### a completed appropriation as of June 8, 1973. Whether future activities of Intakeunder hypothetical contingencies

### and in the light of unknown future events qualifiesmust await future determination. DNR, in its continuing administration of Montana's water use laws, canmonitor Intake's future activities and initiate action to terminate Intake's right of priority of appropriationat any time Intake ceases to prosecute its project with reasonable diligence to completion and thereby subject Intake to the provisions of Montana's Water Use Act

Ithas been held and we approve of the following statement of the principles applicable under the Uniform Declaratory JudgmentAct: "The courts have no jurisdiction to determine matters purely speculative, enter anticipatory judgments, declare social status, dealwith theoretical problems, give advisory opinions, answer moot questions, adjudicate academic matters, provide for contingencies which may hereafter arise, or give abstract opinions.

(Citingcases.) 'TheUniform Declaratory Judgment Act does not license litigants to fish in judicial ponds for legal advice.'" Little v. Wachovia Bank and Trust Company, 252 N.C. 229, 113 S.E. 

### 2d 689. 

### Also see Indiana Alcoholic Beverage Commissionv. Deets, 133 1nd.App. 444, 179 N.E.2d 217. The judgment and decree of the district court ismodified by striking paragraphs numbered 4 and 5 

### therein. All conclusions of law onwhich said paragraphs are based are stricken or modified in conformity with this opinion. We have considered the peripheral arguments and contentions of the parties and find it unnecessary to comment on them in this opinion as none would alter our decision herein. The judgmentand decree of the district court asmodified is affirmed.

JusticeChief Justice

Shanstrom, District sitting in place of Mr. Justice Wesley Castles.