The Montana Senate on Wednesday voted down a proposal to overhaul the use of groundwater exempted from the water-right permitting process.As initially introduced, Senate Bill 358 sought to restrict the use of exempt wells in four of Montana’s fastest-growing areas, expand the volume of groundwater available for subdivision development across much of the remaining parts of the state, and create a water-quality petition process to close aquifers facing nutrient pollution from the septic systems that often accompany wells.Developers have increasingly relied on exempt wells to build low-density housing in rural and semi-rural areas of Montana, arguing that the permitting process is arduous, uncertain and expensive.Between September 2014 and October 2022, the DEQ processed nearly 4,700 subdivision applications featuring exempt wells, compared to 205 that went through the water rights permitting process. Irrigators wary of pinched water supplies, environmentalists worried about aquatic ecosystems, and wastewater operators frustrated with unregulated nutrient pollution have long criticized the state’s administration of exempt wells. Despite widespread agreement that an overhaul is needed, the issue has resisted legislative fixes. Over the interim between the 2023 legislative session and this one, the Montana Department of Natural Resources and Conservation convened a stakeholder group to tackle exempt wells and other water issues that have long vexed water users and water rights administrators.As with other exempt-well bills lawmakers introduced in recent years, SB 358 faced headwinds right out of the gate. During a Feb. 28 hearing on the measure that ran so late into the evening that pizza appeared for commenters and committee members, 76 individuals registered their opposition to SB 358. Some argued it would stifle development and further exacerbate Montana’s housing supply pinch, while others described it as an expansion of an already problematic loophole that would hurt senior water rights holders and degrade water quality. RELATED The great groundwater debate reemerges at Montana Legislature A stakeholder group has been working on a bill that would allow developers to supply up to 24 homes with groundwater exempted from the usual water permitting process. Like other exempt well bills the Montana Legislature has heard over the past two decades, the proposal is expected to spark vigorous debate at the Capitol. by Amanda Eggert 01.30.202502.03.2025 The bill’s 14 proponents described it as a thoughtfully developed science-based compromise that was thoroughly scrutinized by the stakeholders who developed it. Participants in the working group, which did not unanimously support the proposal, included representatives from the development industry as well as employees of the Montana Stockgrowers Association, the Montana Farm Bureau Federation, the Montana League of Cities and Towns, Trout Unlimited and the Clark Fork Coalition.More than a dozen amendments to SB 358 surfaced after the committee hearing. On March 28, the committee adopted a handful of them before voting 9-2 to advance the legislation to the full Senate. Collectively, those amendments modestly reduced the overall volume of groundwater available to developers in “monitoring” areas, struck the Bitterroot Valley alluvial aquifer closure, directed the DNRC to update the Water Policy Interim Committee on SB 358’s implementation, and beefed up compliance enforcement to discourage unauthorized groundwater withdrawals.During floor debate Wednesday, SB 358 sponsor Wylie Galt, R-Martinsdale, described the measure as the “picture of compromise” necessary to address the “tipping point” facing agricultural producers and developers.“We are hurting people with the Wild West of punching holes in the ground,” Galt said, adding that judges will dictate the future of exempt wells if the Legislature fails to act. “Water is an issue. The state is growing. We need to deal with this. Status quo will not work.”Last year, First Judicial District Court Judge Michael McMahon issued a strongly worded ruling chastizing the DNRC for “tortuously misreading its own rules” in its approval of 41-lot phased development the Galt family had proposed near Canyon Ferry. The state “blatantly ignores” a 2009 Supreme Court ruling restricting exempt-well use, McMahonn wrote in his 85-page ruling finding that the DNRC and Broadwater County failed to consider the concerns of neighboring water users.Sen. Willis Curdy, D-Missoula, spoke in support of SB 358 on Wednesday, arguing that the Gallatin, Helena, Bitterroot and Missoula valleys are all heavily over-appropriated and a fix is overdue. In the Gallatin Valley, for example, he said the volume of water appropriated to exempt wells is enough to fill Hyalite Reservoir, one of Bozeman’s primary sources of drinking water. RELATED Broadwater County judge rules against developers in ‘landmark’ water ruling A Broadwater County judge ruled in favor of a small coalition of landowners and water rights holders who challenged a subdivision proposed for an area already grappling with water supply and quality issues. by Amanda Eggert 02.15.202402.15.2024 “This bill does not stop development,” Curdy continued. “It changes how we access water, how much water.”Sen. Theresa Manzella, R-Hamilton, said she appreciated that the Senate Natural Resource Committee amended the bill to move the Bitterroot Valley from a “red” closure zone to a “yellow” monitoring zone, but cautioned that “all yellow lights turn red eventually.”“It’s a major concern for people in my community,” she continued. “I wouldn’t be welcome home if I voted to support this bill, so I’m going to have to vote against this.”Sen. Daniel Zolnikov, R-Billings, countered that “if anybody has the experience, background, knowledge — and honestly, the character — to get this done, or even close,” it is Galt. “If you’re not sure or you’re on the fence, just let him have a few more weeks at it,” Zolnikov urged.Ultimately, 14 senators voted to pass the proposal and 36 lawmakers rejected it. A competing exempt-well bill proposed by Sen. Carl Glimm, R-Kila, remains active.If passed, Glimm’s proposal, Senate Bill 436, would codify “combined appropriation” in law and scale exempt well appropriations so larger parcels are allowed more groundwater. 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