Nearly five years ago, the Missoula-based Grass Valley French Ditch Company began exploring options to market its water shares to interested parties for use in water mitigation. The company finally received approval for the water rights change from the Montana Department of Natural Resources and Conservation last December, and last month announced publicly that what it bills as Montana's "first private water bank" is open for business.
"Basically, seeing the changing landscape and being a water user in the area for quite some time, they saw an opportunity to add a new use to their water right for mitigation for new development," says Chris Corbin, water rights marketing consultant for Grass Valley. "They thought, to still be a viable ditch company down the road, we need to be more forward thinking than just agriculture."
Grass Valley is the first water user in the state to secure marketing for mitigation approval since the Montana Legislature passed a law legalizing such a change in 2011. The new ability essentially allows Grass Valley to sell or lease portions of its sizable water right directly to entities on the lower Clark Fork needing to mitigate water use relating to businesses, subdivisions or agriculture projects. Mitigation is meant to address any adverse affects of water use on other water rights holders in a particular basin.
"If you're taking out water that will deplete the system or adversely affect other water users," Corbin explains, "then you have to mitigate or basically replace that water that you're using."
For example, Avista Utilities maintains water rights in the lower Clark Fork related to its hydroelectric dam near Noxon. Amy Groen, water resource specialist with the DNRC in Missoula, says marketing changes like that made by Grass Valley will allow new water users to mitigate their use "so the Avista water rights can remain whole."
"The marketing for mitigation option allows water right holders some flexibility with the management of their existing water rights," she adds, "and gives future water users the ability to offset the adverse effects of their new use."
According to Grass Valley's change application, the company is now able to retire 3,304 acres from irrigation and convert those water shares for marketed mitigation. Vice President Carl Saunders stated in a release that the move puts Grass Valley "in the driver's seat as the Missoula Valley grows and changes," though Corbin doesn't see much changing for the company at an operational level. Those purchasing or leasing shares from Grass Valley for mitigation won't be voting shareholders—a move Corbin says was designed to protect existing ag users—and any water successfully marketed will simply be subtracted from what Grass Valley diverts from the river at its headgate downstream of Kelly Island.
"If anything, it's just going to provide a potential extra revenue source for the company for operation and maintenance," he says, "and it's going to have a different user class in the company than what they've had previously."This story was updated April 2.