Worried about several subdivisions being built near their Billings-area ranches, a group of senior water rights owners first petitioned the DNRC to change the rule in 2009.

After the Legislature repeatedly interrupted the DNRC’s subsequent attempts at rule making, the group asked the court in May to review the rule to determine whether it complied with state law and legislative intent.

Sherlock found it did not.

State law, namely the Water Use Act, and the state constitution protects state water and water-rights owners, but the current interpretation of “combined appropriation” of groundwater protects neither, Sherlock ruled.

Under Montana’s first-in-time, first-in-right basis of water law, anyone who uses state water must have a water right or permit, and people with older rights have priority when water is limited.

But under a 1973 law, household wells that pump less than 10 acre-feet a year – enough to fill 10 football fields with water 1 foot deep – are exempt from needing a water right, because four decades ago, there were fewer of them.

But now, as more large subdivisions have plunged hundreds of exempt wells into the aquifer, senior water rights owners have started to worry that it could reduce their water.

They can call on junior water rights owners to use less water, but senior water rights owners have no way to force exempt well owners to limit their use.

Developers skirted the water-permit requirement because the 1993 rule changed the previous definition of “combined appropriation” to say that a permit was required only if the wells were physically connected, such as by pipes.

So for example, subdivisions with a 100 houses could suck up to 1,000 acre-feet of groundwater a year with no penalty while farmers using the same amount had to have a water right.

Some areas of high development, such as the Helena Valley, are already starting to register drops in the water table.

In place of the 1993 rule, Sherlock temporarily reinstated the 1987 version, which said water permits are required for developments with two or more wells that don’t have to be physically connected but pull water from the same aquifer.

“Clearly, when the Legislature inserted the term ‘combined appropriation’ into the exempt well statute, the Legislature was under the impression that the reference to ‘combined’ did not require two wells to be physically connected,” Sherlock wrote. “Such being the case, the current administrative rule violates the legislative intent of the drafters of the exempt well statute.”

The 1987 version will remain in place, requiring subdivisions to get water permits or hook up to city water lines, until the DNRC rewrites the rule to define combined appropriation.

Matthew Bishop, attorney for the water rights owners, said part of the ruling was more than the plaintiffs hoped for.

“Sherlock seemed to get this issue,” Bishop said. “With the ’87 rule in place, the status quo is good for us for the first time. And it gives the DNRC incentive to work this out.”

The DNRC has tried but it’s been thwarted by a Legislature influenced by a vocal real estate lobby.

The Billings ranchers sued in 2010 to force the DNRC to change the ’93 rule. The two sides settled with the understanding that the DNRC would have a new rule by December 2013.

The 2013 Legislature passed a law that would have defined combined appropriation once and for all as requiring wells to be physically connected.

Gov. Steve Bullock didn’t sign the law, sending it back to the Legislature with amendments that would allow one exempt well for every 40 acres. The Legislature had little time to respond before the session ended, so the bill died.

Late in 2013, the DNRC tried to write a rule similar to Bullock’s proposal, but the Environmental Quality Council objected, putting the rule on hold past the December 2013 drop-dead date.

That led to Friday’s ruling.

John Youngberg, Montana Farm Bureau Federation president, said the judge’s ruling was common sense because the 1993 rule didn’t follow the law. But he expects the 2015 Legislature will again try to create its own definition.

“They were able to paint us as anti-growth, but we aren’t. We just want growth to retain the value of those senior water rights,” Youngberg said.