A district court judge agreed earlier this month that a state agency likely erroneously dismissed concerns raised by several groups when issuing a water use permit for a forthcoming 1,700-acre resort in Lakeside.  

The Montana Department of Natural Resources and Conservation was sued March 23 after it terminated several objections to the permit application raised by two Flathead County nonprofits, a Lakeside resident and a Texas-based real estate company earlier this year.  

One of the nonprofits, Citizens for a Better Flathead, and Lakeside resident Bruce Young were barred from advancing in the objection process, according to court documents. Lakeside-based North Shore Water Alliance and the Texas real estate investment company were allowed to partially move forward on some of their objections. 

All the objectors filed suit in Lewis and Clark County District Court, arguing their public participation rights under the Montana Administrative Procedures Act were violated. They asked the court to pause an upcoming hearing on the application until the litigation was resolved.  

Judge Michael McMahon granted the motion on June 12 after he found the matter to be of significant public interest and with public rights at stake.  

There appeared to several material, factual and legal deficiencies in the state department’s “unilateral decision to forever muzzle petitioners’ public comments and objections,” McMahon wrote in his order. 

“A stay will allow sufficient time for petitioners to try to remove the muzzle which [the Department of Natural Resources and Conservation] allegedly placed on them,” McMahon said. 

He also ordered all state employees involved with the permit application and decision-making process to appear in an evidentiary hearing by July 27. These employees are required to explain under oath the basis of their decisions, according to court documents.  

The judge simultaneously granted a motion filed by Lakeside County Water and Sewer District, an intervenor in the lawsuit, to move the case to Flathead County District Court. 

LAKESIDE COUNTY Water and Sewer District applied for a beneficial water use permit on April 3, 2025 to use two existing wells connected to an aquifer near Flathead Lake for a 1,700-acre subdivision, dubbed Flathead Lake Club or Territory 1889. The application proposed diverting groundwater at 430 gallons per minute, up to 249.42 acre-feet annually, according to court documents.   

The nonprofits, neighbors and the Texas real estate firm submitted objection letters last fall, after the Montana Department of Natural Resources and Conservation determined no modifications to the application were needed at the conclusion of a public comment period.  

The objection letters were sent back for revision in December before the state agency agreed earlier this year to hold a case hearing, according to court documents.  

Citizens for a Better Flathead and Young were cut from the case hearing completely after department officials deemed their objections invalid. The nonprofit was barred due to lack of standing, and Young was denied participation due to inaccurate and incomplete information.  

ONE OF several objections made by these groups focused on the state agency’s use of a 2019 memo to analyze an aquifer near Flathead Lake.  

Citizens for a Better Flathead argued the memo is outdated and provides insufficient analysis of how proposed deep aquifer wells could affect existing water users and rights holders.  

In a separate lawsuit filed in 2024, the watchdog group and Water for Future Flathead, another nonprofit based in Flathead County, argued the state agency’s use of the memo to permit new wells violates the Montana Water Use Act and Montana Administrative Procedures Act. 

That case is in the hands of Judge Christopher Abbott in Lewis and Clark County District Court. 

Report for America Reporter Hannah Shields can be reached at 406-758-4439 or [email protected]. If you value local journalism, pledge your support at dailyinterlake.com/support.