85-2-428. Temporary lease of appropriation right -- notice. (1) Applications to temporarily lease an appropriation right that comply with the requirements of this section are not subject to the provisions of 85-2-402, 85-2-407, 85-2-408, 85-2-410, or 85-2-436. After obtaining approval pursuant to this section, an appropriator may temporarily lease an appropriation right.

(2) The amount of water leased may not exceed the total consumptive use of the appropriation right. For an irrigation right, the consumptive volume may not exceed 2 acre-feet per acre irrigated.

(3) (a) Each appropriation right leased pursuant to this section:

(i) must have been in use within 5 years prior to the application date;

(ii) may be leased only during the period of diversion for the appropriation right;

(iii) may not be leased for more than 5 years during any consecutive 10-year period;

(iv) may not be leased for more than 40 days a year; and

(v) may only be leased for a beneficial use as defined in 85-2-102.

(b) The volume and flow rate of water leased may not exceed the appropriator's original water appropriation right.

(c) The point of diversion for the appropriation right may not be changed.

(4) The use of an appropriation right on a place of use associated with leased water is prohibited during any year that leased water is put to beneficial use.

(5) Storage may be temporarily added during the term of the leased appropriation right if the water is diverted at the original point of diversion and subsequently put to a beneficial use.

(6) This section does not apply to change in an appropriation right that would result in leased water being transported outside Montana. Proposed out-of-state uses are subject to the provisions of 85-2-402.

(7) Water leased pursuant to this section must be measured at the point of diversion by a meter approved by the department. The appropriator shall report the amount of water measured at the end of the year in which the lease occurred or upon request of the department.

(8) An applicant proposing to lease an appropriation right pursuant to this section shall submit an application on a form provided by the department and a fee as established by rule. The application must include:

(a) the name and address of each lessee;

(b) the names of all owners of each appropriation right;

(c) the number of each appropriation right;

(d) the proposed use and the place of use for the leased water;

(e) the source of water to be appropriated;

(f) the start and end dates of the proposed lease;

(g) the flow rate of the proposed diversion and the volume of water to be used during the lease;

(h) evidence that the appropriation right has been used within the last 5 years;

(i) a statement of potential adverse effect and a description of planned actions to mitigate potential adverse effects that, in aggregate, demonstrate no adverse effect;

(j) a copy of the executed lease agreement; and

(k) a description of how the existing beneficial use of the appropriation right would cease at the place of use during the lease period, including the number and location of acres to be removed from irrigation, if applicable.

(9) Within 10 days of receipt of an application, the department shall provide written notice to potentially affected appropriators identified by the department that are proximate to the point of diversion.

(10) (a) Within 30 days of receipt of an application, the department shall:

(i) determine whether the application is correct and complete;

(ii) evaluate whether the application meets the requirements of subsections (2), (3), and (8); and

(iii) approve or deny the application.

(b) The department may approve an application with conditions.

(c) Leased water may not be used until the department approves an application.

(11) (a) For a period of 30 days from a date an application is authorized pursuant to subsection (10), the department shall accept correct and complete objections to a proposed lease from a person whose property, water rights, or interests would be adversely affected by the proposed appropriation. The objection must be made on a form provided by the department.

(b) Within 5 business days of receipt of a correct and complete objection, the department shall determine whether the objection is valid. A valid objection must contain facts indicating that the rights of other appropriators would be adversely affected by the lease of the appropriation right. If the department determines that an objection is valid, the authorization of the lease is suspended and no water may be put to beneficial use pursuant to the lease.

(c) (i) The owner of an appropriation right whose authorization is suspended under subsection (11)(b) may request a hearing on the objection pursuant to the informal proceedings provided for in 2-4-604 within 15 days of notice of the suspension. At the hearing, the owner of the appropriation right has the burden of proof to prove lack of adverse effects.

(ii) If the owner proves by a preponderance of the evidence that the water rights of other appropriators will not be adversely affected by the lease, the department shall issue an order reinstating the authorization for the beneficial use of the leased appropriation right.

(iii) If the department determines that the water rights of other appropriators have been or will be adversely affected by the lease, the department may revoke the authorization or modify its approval with necessary terms, conditions, restrictions, or limitations.

(d) A person who purposely, with malicious intent, causes the suspension of a temporary lease pursuant to this section through an objection found invalid and frivolous is, upon conviction, guilty of a misdemeanor and shall be fined an amount not to exceed $500.

(12) Violations of this section are subject to the provisions of 85-2-114 and 85-2-122. This subsection does not limit the remedies available to an appropriator to enjoin or seek damages from the owner of an appropriation right who leased the water or from a lessee.

(13) The department shall report annually to the water policy interim committee provided for in 5-5-231 in accordance with 5-11-210. The report must include the number of leases, the amount of water leased, and the number of irrigated acres taken out of production.

(14) Pursuant to 85-20-1902, the provisions of this section do not apply within the exterior boundaries of the Flathead Indian reservation.