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MONTANA ENVIRONMENTAL
INFORMATION CENTER INC.,
CITIZENS FOR A BETTER FLATHEAD,
wC.,
Plaintiffs,
V.
MONTANA DEPARTMENT OF
NATURAL RESOURCES AND
CONSERVATION, MONTANA BOARD
OF LAND COMMISSIONERS,
Defendants.
r
Cause No. BDV 2000-396
Before the Court are the parties' cross -motions for summary judonent. In
addition, on December 11, 2000, this Court preliminarilyenjoined Defendants from requesting
annexation by the city of Kalispell of the following land owned by the State of Montana:
Southeast 114 of Section 36, Township 29 North, Range 22 West, Flathead County, Montana.
This Order will address both the preliminary injunction and the parties' crass -motions for
summary judgment.
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Plaintiffs, Montana F,n�,ironmental Information Center, Inc. ti IC , and Citizens
for a Better Flathead (CFBF) are non-profit corporations involved M, zmona other things,
promoting sustainable development and economic diversity in Flauz Cad Count•, Montana.
Defendant Montana Department of Natural Resource and Conset-vauon (thr Dcr,=ent) is the
state ajency responsible for administering school trust lands held by tilt state o Nlontana under
the general direction of Defendant Board of Land Commissioners (th:- Bo---J" ; h, Board has
general authority for the management of state lands and approves all; oti:er uses of state
lands.
At issue in tl�js case is the proposed development of; er it. sta;w U ems: land located
on the north edge of the city of Kalispell, namely Scction 36 locates in IT-,)v =,si r _9 N. Range
22 West, Flathead County, INIontana (Section 36). lvlore speciftcall\ , t:},is ca ve Livol—s Plaintiffs'
claims that Defendants have violated the Montana Fnviroranental PoLcy .act ('vILEP."�) by failing
to conduct an analysis of the environmental impacts associated will the overall development of
Section 36.
Currently. the majority of Section 36 is open space land pnmrn-wily used for
agricultural purposes. However, Scction 36 is largely surrounded by urban and suburban
development due to the substantial and rapid gt-ovvth of the city of Kalispell over the last decade.
Defendants; therefore, have proposed to develop Section 36 in order to rri t nize leap frog
development beyond this property to less desirable locations. A brief review of Defendants'
efforts in this regard follows.
In 1997, the Department entered into a lease of a portion of Section 36 for a
recreational athletic complex. The Deparmient at that time prepared a "checklist Environmental
Assessment" addressing the various in-ipacts of leasing those acres for an athletic complex.
Subsequently, in May 1998, the Department hired a consultant to initiate a planning process for
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further and more significant commercial, business and residential development of Section 36.
As part of this process, the Department held several public meetings in Kalispell during the
summer and fall of 1998.
On February 8, 1999, the Department's consultant drafted a document entitled
"DNRC Neighborhood Plan - Section 36 - Kalispell, Montana; A proposed amendment to the:
Kalispell City -County Master Plan" (the Neighborhood Plan). Among other things, the
Neighborhood Plan guides the future use and development of Section 36 by setting out the range
of permissible uses and establishing a number of specific development parameters. The plan does
not, however, contemplate or analyze the environmental consequences of its development
parameters. Nor does the plan analyze alternative land use scenarios or the consequences of
1 taking no action on Section 36. In short, the plan does not offer any environmental analysis under
-EPA. The Neighborhood Plan was presented to the Flathead County Planning Board on
April 20, 1999.
At the September 20, 1999, meeting of the Board, the Neighborhood Plan and the
general development of Section 36 were discussed. The Department requested the Board's
approval to proceed with the adoption of local zoning ordinances and to draft a Memorandum of
Understanding (ivlOU) with Flathead County and the city of Kalispell with respect to the
development of Section 36. At that meeting the Department indicated that a full scale ifEPA
analysis would be completed on the overall Section 36 development project and that further
MEPA review would be conducted specific to any subsequent state action. The Department also
represented that its intention would be to do MEPA analysis on the entirety of the project prior
to signing any MOB,`, rather than just on a lease -by -lease basis. Before the close of the meeting,
the Board approved the Department's request.
On April 19, 2000, the Department, Flathead County, and the city of Kalispell
( entered into a MOU regarding the development of Section 36. The MOU stated that the
02/06/01 17:24 FAX 75689'' CITIZEN—CFBF [t3�01
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Department had prepared a Neighborhood Plan which had been adopted as an amendment to the
City -County Master Plan by the Board of Commissioners of Flathead County on May 20, 1999,
and the city of Kalispell on June 7, 1999, The MOU further stated that the Department sought
to permit development of Section 36 in accordance with the Neighborhood Plan.
On May 15, 2000, the Board met and unanimously approved the MOLT. At that
meeting, however, the Department indicated that it would not do a MEPA review on the entire
Section 36 development project, but would complete a statewide programmatic environmental
impact statement for all state land development projects.
Since the approval of the MOU and Neighborhood Plan, the Department has
prepared a document entitled "Special Lease proposal - Accepting Offers - Commercial 'and
Industrial Development Opportunities" (Special Lease Proposal) and the city of Kalispell has
issued a plan to extend utilities to Section 36 (Utility Extension Project). The Special Lease
Proposal outlines the limitations, requirements and deadlines for lease proposals to be submitted
to the Department for the Development of Section 36, It also states that development of Section
36 is guided by the Neighborhood flan and MOU, and that MEPA review will be conducted on
i each selected lease proposal and various alternatives which achieve the same objectives as the
selected lease proposal. The Utility Extension Project states that the Neighborhood Plan is the
controlling proposal for the development of Section 36, and addresses the inf astructurc needs
of Section 36 in accordance with the Neighborhood flan.
The Court heard oral argument on the parties' cross -motions for summary
judgment on November 28, 2000. At that hearing, however, Plaintiffs were not aware of the
circumstances necessitating their December 5, 2000, application for a tfnnporary restraining
j order/preliminary injunction. After considering the parties' briefs regarding the injunction, this
Court issued an order enjoining the Defendants from requesting such annexation and stated that
a more detailed order would follow in explanation. As promised, this effort constitutes the more
ORDER - Page 4
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detailed order.
Preliminary injunction
Plaintiffs' application for a preliminary injunction came on the heels of learning
that the Department was on the verge of submitting a formal request to the city of Kalispell for
annexation and zoning of Section 36 in accordance with the Neighborhood Plan. Plaintiffs
argued that Defendants' annexation request should be enjoined pending the resolution of the
parties' cross -motions for summary judgment. Plaintiffs asserted that, if the annexation request
were granted, any future court -ordered MEPA analysis would be rendered meaningless in terms
of assessing alternatives to the Neighborhood Plan, primarily because the annexation would
statutorily mandate a series of events that would compromise any future, unbiased consideration
of the best uses for Scction 36. Plaintiffs therefore urged the Court to issue an injunction to
preserve the status quo and protect the effectiveness of any possible future judgment for Plaintiffs
in this action.
Defendants, on the other hand, argued that the annexation request is a lawful
activity falling within the sole discretion of the Department which does not affect Plaintiffs' legal
nghts. Defendants further argued that Plaintiffs' right to compel production of a ML-PA document
does not arise until the State issues a lease, and that annexation does not affect the status quo of
-the land.
Under Section 27-19-201, MCA, an injunction may be granted when it appears
j that the applicant is entitled to the relief demanded and the relief, or any part of it, consists in
restraining the commission or continuance of the act complained of, either for a limited period
or perpetually, or when it appears that the commission or continuance of some act would produce
a great or irreparable injury to the applicant, or when it appears that the adverse party is doing,
or threatens or is about to do some act in violation of the applicant's rights, respecting the subject
matter of the action, and tending to render the judgment ineffectual.
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If a party can establish a prima facie case for any of the subsections of Section 27-
19-201, MCA, then a preliminary injunction should issue to preserve the status quo. Porter v_ �
& S Pai=hin, 192 Mont. 175, 181, 627 P.2d 836, 839 (1981). "Status quo" bas been defined
as the last actual., peaceable, noncontested condition which preceded the pending controversy."
Sweet - -irac_ s 1 a_n_nsLtd. v Bd. of .o nZ� C'omm'rs of Sws et Crrass County, 2000 Mont. 147. 2
P.3d 825, 828 (2000) (citations omitted).
In this case, the injunction was granted because Plaintiffs successfully presented
a prima facie case that Defendants' initiation of formal annexation would tend to render any
judgment in their favor (regarding preparation of appropriate TYfEPA documents) ineffectual.
Pursuant to the relevant statutes, the annexation process is initiated by filing a
formal request for annexation. Section 7-2-4403, MCA (1999). Upon receiving the request, "the
governing body of the municipality shall pass a resolution reciting its intention to annex the land
and settin3 a time and place for a public hearing thereon." Section 7-2-4404, MCA (1999)
(emphasis added). The municipality is then required to make a commitment of services for the
proposed uses of the annexed land consistent with the annexation proposal. Section 7-2-4506,
MCA (1999). Finally, the municipality is required to "make plans for the extension of services
i to the area proposed to be annexed and shall ... prepare a report setting forth its plans to provide
'services to such area." Section 7-2-4731, MCA (1999). The plan for services must be in place
prior to the public hearing and must set forth such things as the general land use pattern in the
areas to be annexed, present and proposed boundaries and streets, major gunk water mains, sewer
interceptors and outfalls and other utility lines, as well as the municipality's plans for providing
these services.
The Court considered the arguments of the parties, and in light of the annexation
statutes, felt an injunction was necessary to preserve the status quo in this action. It appeared to
the Court that once annexation is initiated, the aforementioned statutes seem to mandate action
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on behalf of the city of Kalispell that would have fatal consequences for Plaintiffs' MPPA
violation claims. This is primarily due to the fact that according to Defendants, the annexation
will "allow the city to formulate and impose zoning restrictions" (Second Rooney Aff. 1 2) and
that such zoning restnctions would be based upon Defendants' Neighborhood Plan. Once those
zoning restrict -ions are in place, they effectively create a blueprint for the future development of
Section 36. Such a blueprint would foreclose meaningful considerations of alternatives to the
zoning, and thus to the entire development scheme under the Neighborhood Plant.
The Neighborhood Plan sits squarely in the center of the controversy in this case.
It would be disingenuous to allow Defendants to initiate the annexation and zon is of Section 36
prior to this Court making a determination on the merits of Plaintiffs' NI.PA violation claims.
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As stated above, the annexation would tend to make the Neighborhood Plan the master plan for
1 the overall development of Section 36. This would tend to render any )udgrnent in Plaintiffs'
favor regarding preparation of appropriate TMEPA documents ineffectual, since, as Plaintiffs point
out, the Neighborhood Plan would "become virtually a foregone conclusion because every other
alternative will conflict with the zoning and commitment of services that are part of the
annexation process." (Pl. Br. Supp. Temp. Restr. Order and Prelim. Inj., at 2. U. 15-16.)
Because of this, the injunction was granted in order to maintain the parties' last
-actual, peaceable, noncontested condition which preceded the controversy. To rule otherwise
would have significantly frustrated Defendants' efforts to comply with an order mandating MEPA
review of both the overall development of Section 36 and alternatives to the Neighborhood Plan.
For reasons to be discussed more fully below, the Court found it necessary to preserve
Defendants' ability to comply with just such an order.
Cross -Motions for Summary Judgment
The question here is whether the Department was required to comply with MEPA
I when it prepared and approved the Neighborhood Plan for the development of Section 36.
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Defendants argue that the Neighborhood Plan simply does not trigger MEPA review and that the
Department is exempt from MEPA requirements in this case because the plan cannot cause or
result in any change in the existing land uses of Section 36. Plaintiffs contend that MEPA
requires that the Department consider the potentially significant environmental effects of the
decision to expand the allowable uses of Section 36 prior to approving the land use plan.
Plaintiffs further contend that MEPA requires that the Department evaluate alternatives to the
proposed land use plan_
The Court must review the agency action to see if it was arbitrary, capricious, or
unlawful. North Fork Pms- Ass'n v Denr't of State i and;, 238 Mont. 451, 459, 778 P.2d 862, 867
(1989). To determine if the agency action is laxrful, the Court must determine whether the agency
violated any statutes or regulations that were applicable to it. In order to determine if the decision
is arbitrary or capricious, the Court must determine whether the decision was based on a
consideration of the relevant factors and whether there has been a clear error of judgment. In such
an analysis, the Court is not to decide if the agency reached the correct decision by substituting
its judgment for that of the administrative agency. W. at 465, 778 P_2d at 871.
Sections 75-1-101 through 75-1-324, MCA, set out the general policy of
environmental protection in Montana and contain the legislative authorization and directive to
state agencies to prepare environmental impact statements (EIS) in any planning and
decision -making that may impact the environment. The specific procedures for carrying out the
policy requirements of ivfEPA are contained in the administrative rules promulgated under the
statute.
According to those rules, MEPA is triggered, and the Department is required to
11 prepare an EIS, when there is major state action authorizing the use of land and it is shown that
the action may significantly effect the quality of the human environment. ARM 36.2.523(1)(b).
The Department's administrative rules define an "action" as, among other things, a project,
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program or activity directly undertaken by the agency; or a project or activity involving the
issuance of a lease, or other entitlement for use or permission to act by the agency. ARM
36.2.522(1).
Here, the parties apparently agree that the Neighborhood Plan constitutes "action"
by the Department as defined in ARM 36.2.522(1). (S,= State's Br. Supp. State's Mot. Sturim.
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J., at 6.) Therefore, the next line of inquiry concerns whether the Neighborhood Plan may have
a significant effect on the quality of the human environment. Plaintiffs need not show that
significant effects will occur, rather, they must raise "substantial questions whether a project may
have a significant effect." valli County Eish and G=fm ss'n v_ Mont, i)ep't of Stat . .ands,
273 Mont. 371, 379, 903 P.2d 1362, 1368 (1995),
The Neighborhood Plan authorizes a significant change in the permissible uses of
Section 36 because it allows residential and commercial development on open space land
previously used for agricultural purposes. Aithough the Neighborhood Plan is just a plan, the
record before the Court indicates that it is, in effect, a document which constitutes a binding
decision that will control all subsequent development on Section 36. The Neighborhood Plan
provides substantial details about the new uses allowed on Section 36 and precludes other types
of development which are inconsistent with the plan. It also effectively negates the possibility
-of preserving the acreage as open space land.
Based on the foregoing changes in land use, it is reasonable to conclude that
I numerous potential impacts could result from implementing the Neighborhood Plan for Section
36. indeed, the city of Kalispell recognized such inherent impacts when it prepared the Utility
Extension Project for Section 36 in accordance with the Neighborhood Plan. Loss of hundreds
of acres of farmland, changes in demographics, housing issues, local employment and income,
and energy consumption, to name a few, were listed in the Utility Extension Project among those
potential impacts. The Neighborhood Plan provides for the development of open space,
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agricultural land into commercial and residential property. Such a significant change in use will
have a significant effect on the quality of the human environment. Clearly, the Neighborhood
Plan is a proposal which effectively controls the future development of Section 36. As such, it
constitutes an action that has potentially significant environmental consequences.
Although Defendants suggest that MEPA is not triggered in this case pursuant to
Section 77-1-121, MCA, the clear language of that statute suggests otherwise:
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77-1-121., Environmental review — exemption, (1) The department and
board are required to comply with the provisions of (TVIEPA] when implementing
provisions within Title 77 only if the department is actively proposing to issue a
sale, exchange, night -of -way, easement, placement of improvement, lease, license,
permit, or other authorization for use of state lands or is acting in response to an
application for an authorization.
(Emphasis added.)
The Neighborhood Plan and MOU represent a proposal for action which clearly
falls wiftri the meaning of an "other authorization for use of state lands." The Department has
approved the Neighborhood Plan and MOU, and, because they will likely cause significant
environmental impacts, a MEPA analysis is required. S= Section 75-1-201(1)(b)(iii), MCA
One of the purposes an EIS serves is to develop conditions and stipulations to
I mitigate the potential impact of an action on the environment. Here, were the Department to
proceed by analyzing analyzdevelopment proposals on a lease -by -lease basis, it would ignore the
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fundamental importance of the effects of potential development of Section 36 as a whole. The
Department violated MEPA as well as its own implementing regulations when it failed to conduct
the required MEPA analysis to determine the significance of, impacts of, and alternatives to the
proposed development of Section 36 according to the Neighborhood Plan.
The Court must note that this is somewhat baffling considering the Department's
initial willingness to commit to just such a course of action. Plaintiffs' Exhibit 3, a copy of the
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minutes from the September 20, 1999, meeting of the Board, reveals the following:
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Governor Racicot asked if the Department intends to have full scale MEPA
analysis of the entire development not just on the lease by lease, basis before it
,proceeds.
Mr. Rooney said it is the Department's intention to do MEPA analysis on the
entirety of.the project which will be conducted before the MOU is signed. He
said the plan is to go forward with the intention that this is the plan for the section
and analyze those impacts-
Initiatly, it appears that the Department recognized its duty to perforrn an EIS in
order to comply with MIPA. Though the Department's position on.this matter has changed, the
requirement that an EIS be prepared remains. The Department must "determine the significance
of impacts associated with a proposed action." ARM 36.2.524. In addition, the Department is
required to provide a detailed statement on alternatives to the proposed action; and to study,
develop, and describe appropriate alternatives in any proposal that involves unresolved conflicts
concerning alternative uses of available resources. Section 75-1-201,(1)(b)(iv)(C) and (1)(b)(v).
MCA (1999).
For the forgoing reasons, Plaintiffs motion for summary judgment is granted, and
the Department is directed to conduct an appropriate MEPA review.
..DATED this I day of January 2001.
FO
Jack R. Tuholske
Tommy H. Butler/Michadl J. Mortimer
I TIJMSIMUIC.ORD
rid