No. 13367 

IN THE 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. 

The Montana Department of Natural Resources and Conservation filed an action seeking a declaratory judgment that 

Intake Water Company does not have a valid appropriation of 

80,650 acre 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 construction of the 

diversion works to completion, it is entitled to relate the 

priority of its appropriation back 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 Department of Natural Resources and Conservation appeals. 

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 

of water use laws. Defendant, counterclaimant and respondent 

is Intake Water Company (Intake), a Delaware corporation and 

wholly owned subsidiary of Tenneco, Inc. Intake is authorized 

to do business in Montana and its corporate powers include the 

right to appropriate waters, acquire water rights, and sell 

the water to customers and users in the manner of a private 

water company, including the construction of dams, reservoirs 

and water transmission facilities. 

The subject matter of this litigation is a project by 

Intake involving the appropriation of 80,650 acre feet per 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 water 
will be pumped out of the river, conveyed by pipelines to an 

off-stream storage reservoir, and from there distributed by 

pipelines to the service area. Intake intends to sell the 

water to its customers for irrigation, industrial, municipal 

and domestic use. 

The service area or area of intended use of the appropriated 

waters are portions of Dawson and Wibaux Counties in Montana and 

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

area lies generally in a southeasterly direction from the point 

of diversion some 30 miles. This area contains large coal reserves which form a large part of the water demand for the project. 

The size of the service area was primarily determined by the extent of usable coal reserves. 

DNR claims that the intended use of the appropriated 

waters is primarily for a coal gasification plant for the production of synthetic gas to supplement declining natural gas reserves. 

Jack Tindall, general manager of Intake and an official of 

Tennessee Gas Transmission Company, a Tenneco subsidiary, which 

is a major natural gas pipeline system that supplies gas to its 

customers, testified that he became involved in the Intake project because Tenneco and its subsidiaries were looking for alternate supplies of natural gas and water is needed to convert coal 

to gas. While denying that Tenneco or its subsidiaries had any 

specific plans to construct a coal gasification plant at the time 

of trial, he admitted they were working on it and that Tenneco 

and its subsidiaries could be one of the industrial customers 

for water from the Intake project. Tindall testified that he 

made the determination of the amount of Intake's appropriation-- 

80,650 acre feet per year--by the amount needed to utilize the 

coal in the area of intended use (64,000-65,000 acre feet annually) plus other uses and losses that would bring the total to 
80,650 acre feet per year. 

The off-stream reservoir involved in the project will 

be approximately 25,000 acre feet in capacity and will inundate 

approximately 700 acres of land. The purpose of this reservoir 

is to permit diversion of the river waters during periods of 

surplus waters and storage of such waters for use during the 

periods of low water in the river. This system, it is claimed, 

will minimize the impact of the diversion on the river itself 

and insure the availability of water for prior appropriators 

and users downstream. 

There is an existing dam that creates a backwater in 

the river at the diversion site which permits the taking of water 

without the cost and environmental consequences of constructing 

another diversion dam across the river. 

The project contemplates removal of waters from the 

Yellowstone River basin and sale of some of these waters outside 

the basin in North Dakota. Such removal requires unanimous consent of Montana, North Dakota and Wyoming under Article X of 

the Yellowstone River Compact and requires consent of the Montana 

legislature under section 89-846, R.C.M. 1947. Neither consent 

has been secured to date. Intake commenced an action in federal 

court in June, 1973 to have section 89-846 and Article X of the 

Yellowstone River Compact declared unconstitutional. (Civil 

Docket No. 1184, United States District Court for the District 

Court of Montana, Billings Division). This suit has not been 

concluded to date. 

According to the testimony of Jack Tindall, general manager of Intake, the project would still be economically feasible 

if industrial users were excluded and only agricultural, municipal and recreational users remained provided these latter users 

could pay the price to provide a fair return on the capital 
expended for the project. There is no substantial evidence 

indicating whether the project would remain economically feasible if users outside the Yellowstone River basin were excluded. 

On June 29, 1973 Intake commenced a suit in state court 

seeking determination of whether it must comply with the provisions of the Montana Major Facility Siting Act (Ch. 8, Title 

70, R.C.M. 1947, as amended) in constructing its diversion works 

for appropriation of the waters of the Yellowstone River. (Civil 

Docket 36907, district Court, first judicial district, State of 

Montana, Lewis and Clark County.) This suit remains unresolved 

to date. 

During the period since inception of the project 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 directly attributable to construction of the project. 

On June 8, 1973 Intake posted its notice of appropriation 

of the waters at the point of intended diversion and filed notices 

of appropriation thereafter with the county clerk in each Montana 

county through which the Yellowstone River flows as required by 

section 89-810, R.C.M. 1947. 

Thereafter Intake took the following identifiable action 

in the 40 day period following June 8 pursuant to section 89- 

811, R.C.M., requiring the appropriators to " * * * proceed to 

prosecute the excavation or construction of the work by which 

the water appropriated is to be diverted * * *": 

(1) In addition to filing copies of the notice of 

appropriation with the various county clerks and recorders, 

Intake filed copies of the notice with the director of DNR and 

the North Dakota State Water Commission. 

(2) Intake selected, staked and flagged locations for 

five test hole borings at the site of 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 determine whether Intake must comply with the Montana 

Major Facility Siting Act with respect to construction of its 

diversion works. 

(6) Filed and proceeded to prosecute the federal court 

suit to determine the constitutionality of section 89-846 and 

Art. X of the Yellowstone River Compact. 

(7) Contacted environmental consultants and governmental 

agencies with respect to required environmental work on the 

project. 

(8) Continued the ongoing drafting of preliminary engineering plans for construction of the diversion works. 

(9) Continued the ongoing selection, pricing and availability of equipment for the diversion works. 

(10) Continued the ongoing legal and administrative work 

necessary to construction of the diversion works and completion 

of the appropriation. 

(11) Commenced and continued preparation of the design 

drawings of the diversion works. 

Following this 40 day 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 

identification of three potential locations for an off-stream 

reservoir; hired a Houston, Texas firm to perform topographic 

mapping including topographic contours of 61,660 acres 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 rural domestic 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 construction of the project and the impoundment of 

water in the reservoir in January, 1982 include survey and 

geological investigation of the three potential reservoir sites; 

socio economic data gathering; review of mitigating 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; selection of a reservoir site; final engineering design of the diversion work; updating hydrological studies, 

water market and water demand studies; historical and archaelogical 
studies; procurement of a construction permit from the U. S. 

Army Corps of Engineers; formulation of 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 diversion works 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 on which of three reservoir sites 

was ultimately selected. These estimates varied 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 

statement by the Bureau of Reclamation in the spring of 1979; 

the commencement of construction by 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 court made and filed extensive and 

detailed findings of fact and conclusions of law. A judgment 

and decree based on these findings and conclusions was entered 

on the same date. The judgment provided 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) Intake proceeded to prosecute the excavation or 

construction of the diversion works 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 

constitute prosecution 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 

the Montana 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 

capable of diverting up to 80,650 acre feet per 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 the water appropriated was to be diverted 

within 40 days of posting of its notice of appropriation? 

(3) Do considerations of 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 contentions of 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 requirements are met 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 the water 

appropriated is to be diverted * * *" within 40 days after posting 

its notice of appropriation; that because of a number of legal 

and practical hurdles that must be overcome in order to construct 

the project which are totally beyond Intake's ability to control, 

and because construction will take years to complete, considerations of equity and public policy preclude entry of an open 

ended decree wherein the fate of over 80,000 acre 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 it did in fact " * * * 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 " * * * prosecute[d] the same with reasonable diligence * * *" toward completion; and that despite the number of 

legal and practical hurdles it must 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 "relation back" of its priority of appropriation to June 8, 1973 is not lost. 

We note that as a practical matter Intake posted 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, 1972 before the 1973 legislature even met. We simply note the existence of this situation 

to place the present 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 conspicuous place at 

the point 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 file with the county 

clerk of the county in which such appropriation 

is made 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 from which 

the diversion is made, if such stream have a name, 

and if it have not, such a description of 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 affidavit must state that the matters 

and facts contained in the notice are true. 

"89-811. Diligence in appropriating. Within forty 

days after posting such notice, 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 same with 

reasonable diligence 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 accordance with 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 complying with the provisions of this chapter 

the right to the use of the water shall relate back 

to the date of posting the notice." 

The parties to this litigation apparently concede that 

what constitutes compliance with the statutory requirement that 

the appropriator must " * * * proceed to prosecute the excavation 

or construction of the work * * *" within 40 days after posting 
the 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 it must be reasonably applied in 

view of the magnitude of the project and the legal and practical 

hurdles that must be overcome, and refers us to a number of 

Colorado cases wherein 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 Tunnel Water 

& 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 Counties Water 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; Colorado Water 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 right must be noted. Section 89-867(4), R.C.M. 1947 

as amended, defines an "Existing right" under the Montana Water 

Use Act of 1973 in this language: 

"(4) 'Existing right' means a right to the use of 
water 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, further provides: 

" (e) "Existing right', 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 

appropriation was begun." 

One further matter is material to an overview of this 

appeal. The findings of fact and conclusions of 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 

Intake had prosecuted excavation or construction 

of the work by which the water 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 defendant did not commence to prosecute 

excavation or construction of the work 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 which 
the water appropriated is to be diverted within 40 days after 

posting notice of the appropriation. Section 89-811. (4)~he 

appropriator must therealfter prosecute such work 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 relates back 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), 45 Mont. 154, 122 

P. 575. A declaration of 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 

~dministrative Code for the reasons and under the authority of 

General Ag. Corp. v. Moore, 166 Mont. 510, 534 P.2d 859. There 

we held that priority of appropriation of water is a valuable 

right within the meaning of Article IX, Section 3, 1972 Montana 

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 "existing right" possessed by Intake is 
not synonymous with a valid appropriation. What Intake possesses 

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 the waters of the 

Yellowstone River as of June 8, 1973. 

The principal battleground at the trial was whether 

Intake had complied with section 89-811, R.C.M. 1947, requiring 

that it " * * * 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 conclusion of 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 Intake had prosecuted 

excavation or construction of the work by which the water is to 

be diverted with reasonable diligence 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 the meaning of the words 

" * * * proceed to prosecute the excavation or construction of 

the work * * *". In construing a statute, the intention of the 

legislature is controlling. Section 93-401-16, R.C.M. 1947. 

The intc:ntion of the legislature must first be determined from 

the plain meaning of the words used, and if interpretation of 

the statute can be so determined, the Court may 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., 151 Mont. 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, 95 Mont. 30, 25 P.2d 128; 

Burritt v. City of Butte, 161 Mont. 530, 508 P.2d 563. 

Both parties concede that this Court has not heretofore 

been called upon to construe the meaning of the statutory phrase 

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 requires actual on-site 

excavation or construction within 40 days of posting notice of 

appropriation and that drilling 5 test holes along a tentative 

pipeline to determine whether 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 40 day period are part of its ongoing program to construct the project and that the legal and practical constraints 

on its activities by environmental requirements of the National 

Environmental Policy Act, 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 40 day period. 

"Proceed" is defined in Webster's New Twentieth Century 

Dictionary (2d ed), in this manner: 

"TO move, 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 regulated manner, to 
begin 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 statutory phrase. 

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 40 day period. 

But these dictionary definitions shed no light on whether actual 

on-site excavation or construction is required in the 40 day 

period. 

We note that the legislature used the phrase "proceed to 

prosecute" rather than "commence actual excavation or construction". Section 89-811 was 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 

irrigation projects of greater magnitude and used the statutory 
language that still exists. This same statutory language has 

been retained and reenacted in 1887, 1895, 1907, 1921 and continues unchanged to the present time. 

If the legislature had 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 unappropriated waters 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, stream or 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. * * *" (Emphasis supplied.) 

A statute must 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 forfeiture of 

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-case basis. The law in 

this area is summarized by a leading authority, Clark, Waters & 

Water Rights, Vol. 6, 5514.1, pp. 308, 309, in this language: 

"What constitutes due 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 

is usual, ordinary and reasonable under the 

circumstances. * * * So long as the applicant 

prosecutes the construction of works in good 

faith with a steady effort, he should be held to 
have prosecuted with diligence." 

In the present case we have a multi-million dollar 

project of great complexity and magnitude that will require 

several years to complete. Removal of actual and potential 

legal constraints arising out of Article 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 

requirements of 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 contractor moves in. It would be 

sheer folly to commence the actual excavation and construction 

of the diversion works before completion of these prior steps 

which is impossible within the 40 day statutory period 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 diversion works within the 40 day 

statutory period is required. Solberg v. Sunburst Oil & Gas Co., 

(1925), 73 Mont. 94, 104, 235 P. 761, interprets the phrase 

"commencing drilling operations" in an oil and gas lease to 

" * * * denote unmistakably the first movement of the drill in 

penetrating the ground. * * *I1 and work preliminary thereto did 

not constitute compliance. State of Arizona v. U. S. Land 

Company (1966), 3 Ariz.App. 167, 412 P.2d 736, involved interpretation of the words "substantially commencedu in Arizona's 

Water Code dealing with construction of ground water wells and 

held that preliminary work was insufficient compliance. Rupp v. 
Earl H. Cline & Sons, Inc. (1963), 230 Md. 573, 188 A.2d 146, 

1 ALR3d 815, dealt with priorities under Maryland's mechanic's 

lien laws after construction has 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. Harriman Nat. 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 improvements were 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 license by 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 interpretation of the Montana statute. They involve 

entirely different statutory language under statutes whose purpose is dissimilar from that of our statute. Under these circumstances, we fail to see how they aid in interpreting and construing the meaning 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 commencement of 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 is whether equitable and public policy 

- 21 - 
considerations preclude Intake from claiming an inchoate right 

to appropriate 80,650 acre feet per year of the waters of the 

Yellowstone River. 

The gist of DNR's argument on this issue, as we understand it, is that the judgment here constitutes a judicial stamp 

of approval of Intake's project for an indefinite or 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 the waters of the Yellowstone River; 

that Intake's project is contrary to public policy and should not 

be approved because of the substantial number of legal and practical hurdles that must be overcome to make this project 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 

similar decrees in Colorado is not in point because Colorado statutes authorizing conditional decrees with periodic judicial review have no counterpart in Montana. 

Intake's contentions, on the other hand, Arethat DNR's 

concern over the effect of the judgment on 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 reality would benefit the people of Montana by putting a 

small portion of the 8.8 million acre feet of surplus waters 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 considerations do 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 constitutionality of the Yellowstone River 

Compact; and that the Montana Declaratory Judgment Act furnishes 

sufficient legal foundation for entry of the judgment here 

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 authorities previously 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 including Art. X of the Yellowstone River 

Compact, section 39-846, R.C.M. 1947, and the applicability of 

the Major Facility Siting Act. Considerations of equity and 
public policy in no way preclude this. The Montana Declaratory 

Judgment Act authorizes the instant action. It provides 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 Judgment and Decree do 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 considerably beyond 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 Docket No. 

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 diversion works 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 

89-811 and 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 that may or may not 
occur. It does not require diligent prosecution of the action 

to completion by Intake. It grants to Intake a "carte blanche" 

for any actions it may take thereafter to comply, without definition or limitation, without regard to reasonableness, and 

under unknown facts that may occur or circumstances that may 

exist in the future. A determination of whether Intake, following the date of this trial, has continued to prosecute its project with reasonable diligence is a question of fact under the 

authorities previously cited. That determination must 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 5 provides: 

"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, (but not exceeding 

80,650 acre feet per year), for sale, rent or distribution for agricultural, industrial, municipal 

and domestic purposes, (and for 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 this paragraph can be interpreted as granting 

Intake an accrued appropriation as of June 8, 1973 by use of 

the word "is" rather than "will be". As previously discussed, 

Intake simply possesses an uncompleted appropriation at this time. 

What has been decided here today is that Intake has complied with Montana water appropriation statutes to the date of 

trial and upon completion of compliance with statutory requirements, Intake's "existing right" of priority of appropriation 

will ripen into a completed appropriation as of June 8, 1973. 

Whether future activities of Intake under hypothetical contingencies 
and in the light of unknown future events qualifies must await 

future determination. DNR, in its continuing administration 

of Montana's water use laws, can monitor Intake's future activities and initiate action to terminate Intake's right of priority of appropriation at 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 

It has been held and we approve of the following statement of the principles applicable under the Uniform Declaratory 

Judgment Act: 

"The courts have no jurisdiction to determine 

matters purely speculative, enter anticipatory 

judgments, declare social status, deal with 

theoretical problems, give advisory opinions, 

answer moot questions, adjudicate academic 

matters, provide for contingencies which may 

hereafter arise, or give abstract opinions. 

(Citing cases.) 'The Uniform 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 

Commission v. Deets, 133 1nd.App. 444, 179 N.E.2d 

217. 

The judgment and decree of the district court is modified 

by striking paragraphs numbered 4 and 5 therein. All conclusions 

of law on which 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 judgment and decree of the district court as modified 

is affirmed. 

Justice 
Chief Justice 

Shanstrom, District 

sitting in place of Mr. 

Justice Wesley Castles.