Full Opinion

10/13/2026 DA 25-0710 Case Number: DA 25-0710 IN THE SUPREME COURT OF THE STATE OF MONTANA 2026 MT 242 YELLOWSTONE COUNTY, Petitioner and Appellant, v. MONTANA DEPARTMENT OF ENVIRONMENTAL QUALITY, Respondent and Appellee. APPEAL FROM: District Court of the Thirteenth Judicial District, In and For the County of Yellowstone, Cause No. DV-24-80 Honorable Jessica T. Fehr, Presiding Judge COUNSEL OF RECORD: For Appellant: Steve Williams, Deputy Yellowstone County Attorney, Billings, Montana For Appellee: Kurt R. Moser, Staff Attorney, Department of Environmental Quality, Helena, Montana Submitted on Briefs: May 6, 2026 Decided: October 13, 2026 Filed: __________________________________________ Clerk Justice Katherine M. Bidegaray delivered the Opinion of the Court. ¶1 Yellowstone County (the County) appeals the order of the Thirteenth Judicial District Court, Yellowstone County, granting summary judgment to the Montana Department of Environmental Quality (DEQ) and denying the County’s cross-motion for summary judgment. The County sought categorical declarations that it lacked authority to perform the acts required by Admin. R. M. 17.30.1111(6) (2022) and that those requirements constituted an unfunded mandate. We restate and address the following issues: 1. Whether the District Court correctly granted summary judgment to DEQ on the County’s categorical claim that it lacks authority to perform the acts required by Admin. R. M. 17.30.1111(6) (2022). 2. Whether the requirements of Admin. R. M. 17.30.1111(6) (2022) constitute an unfunded mandate under § 1-2-112, MCA.1 ¶2 We affirm on grounds narrower than those adopted by the District Court. FACTUAL AND PROCEDURAL BACKGROUND ¶3 Congress enacted the modern Federal Water Pollution Control Act, commonly known as the Clean Water Act (CWA), in 1972. The CWA generally prohibits any person from discharging pollutants into navigable waters except as authorized by the Act and establishes the National Pollutant Discharge Elimination System (NPDES). 33 U.S.C. §§ 1311(a), 1342(a). A state may administer its own NPDES program after obtaining approval from the United States Environmental Protection Agency (the EPA), and 1 Unless otherwise indicated, all references to the Montana Code Annotated are to the 2021 edition, which was in effect when the 2022 MS4 General Permit became effective. 2 Montana obtained approval to do so in 1974. 33 U.S.C. § 1342(b); Upper Mo. Waterkeeper v. Mont. Dep’t of Env’t Quality, 2019 MT 81, ¶¶ 3–4, 395 Mont. 263, 438 P.3d 792. ¶4 In 1987, Congress amended the CWA to regulate storm water discharges from municipal separate storm sewer systems (MS4s). Congress directed that permits for municipal storm water discharges “shall require controls” to reduce pollutant discharges “to the maximum extent practicable.” 33 U.S.C. § 1342(p)(3)(B)(iii). Congress also directed the EPA, in consultation with state and local officials, to regulate additional storm water discharges as necessary to protect water quality. 33 U.S.C. § 1342(p)(5), (6); Upper Mo. Waterkeeper, ¶¶ 5–6. The EPA implemented that direction through the Phase II program governing small MS4s. ¶5 The EPA’s regulations require permits for regulated small MS4s to include six minimum control measures: (1) public education and outreach on storm water impacts; (2) public involvement and participation; (3) illicit-discharge detection and elimination; (4) construction-site storm water runoff control; (5) post-construction storm water management in new development and redevelopment; and (6) pollution prevention and good housekeeping for municipal operations. 40 C.F.R. § 122.34(a), (b) (2022). A small MS4 may apply for an individual permit or seek coverage under an available general permit. 40 C.F.R. § 122.33(b) (2022). ¶6 DEQ administers the Montana Pollutant Discharge Elimination System (MPDES) under the Montana Water Quality Act (MWQA). Sections 75-5-211, -401, -402, MCA. Like the CWA, the MWQA generally prohibits the discharge of wastes into state waters without a current permit. Section 75-5-605(2), MCA. In 2003, the Montana Board of 3 Environmental Review adopted rules establishing a small-MS4 MPDES permit program to comply with the CWA. Upper Mo. Waterkeeper, ¶ 7. Montana’s rules require the same six minimum control measures as the federal regulations. Compare Admin. R. M. 17.30.1111(5), (6) (2022), with 40 C.F.R. § 122.34(a), (b) (2022). ¶7 Portions of Yellowstone County outside the City of Billings qualify as a regulated small MS4. Admin. R. M. 17.30.1102(23)(a)(i) (2022); Upper Mo. Waterkeeper, ¶ 7. The County sought authorization to discharge pollutants under the first four iterations of DEQ’s MS4 General Permit. When DEQ issued the 2022 MS4 General Permit, the County initially declined to seek coverage because it questioned its authority and the absence of a funding source. In November 2023, the EPA ordered the County either to cease storm water discharges from its MS4 or to apply for permit coverage. The EPA also directed the County to identify any minimum-control-measure element it believed state or local law prevented it from implementing, explain its position, and describe policies and procedures intended to achieve the goals of the relevant measure. ¶8 The County filed this declaratory-judgment action on January 22, 2024. While the litigation was pending, the County applied for coverage on July 11, 2024, and DEQ authorized its discharges under the 2022 permit on September 5, 2024. Its Public Works Director stated by affidavit that the County had never fully complied with the permit requirements and had spent approximately $638,645 between 2005 and 2021 attempting compliance, with additional expenditures after 2021. The County maintained that it could control its own conduct but lacked legislative authority to enact and enforce the third-party regulatory mechanisms contemplated by portions of Admin. R. M. 17.30.1111(6) (2022). 4 ¶9 The parties filed cross-motions for summary judgment. The District Court heard argument on November 22, 2024, and on May 12, 2025, granted DEQ’s motion and denied the County’s motion. The court concluded that the County possessed the authority necessary to implement the six minimum control measures and that the permit requirements satisfied the constitutional-law, federal-statute, and operational-necessity exceptions to § 1-2-112, MCA. The County’s motion to alter or amend was deemed denied, and the County appealed. STANDARD OF REVIEW ¶10 We review a district court’s grant or denial of summary judgment de novo and apply the same criteria under M. R. Civ. P. 56(c) that the district court applied. N. Cheyenne Tribe v. Mont. Dep’t of Env’t Quality, 2010 MT 111, ¶ 18, 356 Mont. 296, 234 P.3d 51. Summary judgment is appropriate when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. M. R. Civ. P. 56(c)(3). We review a district court’s interpretation of law in a declaratory-judgment action for correctness. City of Missoula v. Fox, 2019 MT 250, ¶ 6, 397 Mont. 388, 450 P.3d 898. DISCUSSION ¶11 1. Whether the District Court correctly granted summary judgment to DEQ on the County’s categorical claim that it lacks authority to perform the acts required by Admin. R. M. 17.30.1111(6) (2022). ¶12 A legal duty and governmental power are distinct. A statute, rule, or permit may impose a duty on a county when the issuing authority acts within its delegated authority. The duty does not, by its own force, confer legislative or coercive power that Montana law has not provided or necessarily implied. 5 A general-powers county must trace its regulatory authority to law ¶13 Article XI, Section 4(1)(b), of the Montana Constitution provides that a county without self-government powers possesses “legislative, administrative, and other powers provided or implied by law.” Article XI, Section 4(2), directs courts to construe those powers liberally. Section 7-1-2101(2), MCA, implements that constitutional structure by providing that a county has powers specified in the Code or special statutes and powers “necessarily implied from those expressed.” Liberal construction allows a court to read an existing grant of power broadly enough to accomplish its lawful purpose. It does not eliminate the requirement that law provide or necessarily imply the power in the first place. ¶14 Sections 7-5-2101 and -2102, MCA, do not alter that principle. Section 7-5-2101(1), MCA, authorizes county commissioners to care for county property and manage county business and concerns where no other provision is made by law. Section 7-5-2101(2), MCA, authorizes commissioners to perform acts required by law or necessary to discharge the duties of the county’s chief executive authority. Section 7-5-2102, MCA, separately authorizes the board, subject to legal limitations, to make and enforce rules for county government, the preservation of order, and the transaction of business as necessary. Both provisions expressly subject county power to “such limitations and restrictions as are prescribed by law.” Neither provision automatically confers every coercive regulatory tool that an administrative agency includes in a permit. ¶15 Our recent decision in Treasure County v. Edlund establishes the proper inquiry. We held that a county could not invoke its general authority under § 7-5-2101, MCA, to 6 create a detailed countywide permitting and enforcement regime when specific statutes prescribed and limited county authority over the regulated subject. Treasure County v. Edlund, 2026 MT 134, ¶¶ 15–16, 41–44, 51–52, 428 Mont. 498, 591 P.3d 583. We emphasized that the proposed ordinance had to rest on valid statutory authority and that specific statutes controlled over general county powers to the extent of any conflict. Edlund, ¶¶ 16, 51–52. The inquiry asks whether law grants the County the power exercised, not whether an opposing party can identify a statute expressly prohibiting it. ¶16 The inquiry begins with the County’s authority and then considers applicable statutory limitations; the absence of an express prohibition does not itself establish authority. A general-powers county does not possess every power that Montana law fails expressly to prohibit. It possesses powers that Montana law provides or necessarily implies. The ordinary appellate rule that an appellant bears the burden of establishing error does not change that substantive limitation. In re Marriage of McMahon, 2002 MT 198, ¶ 7, 311 Mont. 175, 53 P.3d 1266. That procedural rule cannot supply governmental authority or relieve this Court of its obligation to identify the legal source of governmental power. ¶17 The implied-powers cases on which DEQ relies do not support a broader rule. In State ex rel. Dreher v. Fuller, 257 Mont. 445, 448–52, 849 P.2d 1045, 1047–49 (1993), the Legislature expressly authorized counties to regulate subdivisions, and we upheld procedures that gave practical effect to that express authority by allowing a county to evaluate claimed exemptions from subdivision review. In Ryan v. Board of County Commissioners for Gallatin County, 190 Mont. 273, 281–82, 620 P.2d 1203, 1208–09 7 (1980), the Legislature expressly authorized the county to approve a landfill-operating contract, and we inferred the correlative power to withdraw that approval for good cause. Both cases inferred a means reasonably necessary to exercise a legislatively assigned function. Neither case held that an agency may create a new county police power by imposing an obligation that assumes the existence of that power. ¶18 The County’s historical conduct does not cure the problem. Its prior permit applications and partial storm water activities corroborate that it owns or operates a regulated small MS4 and has practical capacity to perform some program functions. That history cannot amend the Montana Code or create legislative authority through acquiescence, repetition, or administrative convenience. The record reflects that the County never achieved full compliance and continued to question whether it possessed authority to regulate third parties. Even complete historical compliance could not independently establish a governmental power that Montana law did not provide or necessarily imply. The County’s categorical claim nevertheless fails ¶19 The County presses its sound government-structure premise too far. The County correctly argues that DEQ cannot create county power through an administrative rule or permit. The County nevertheless treats its asserted lack of comprehensive authority to regulate third parties as establishing that it cannot implement the challenged minimum control measures. That argument does not account for the rule’s express limitation of the ordinance and regulatory-mechanism requirements to the extent allowable under state or local law. Those requirements do not compel an exercise of authority the County lacks 8 and do not excuse the County from the other applicable components of the control measures. ¶20 The Legislature placed political subdivisions within the permit regime of the MWQA. Section 75-5-103(24), MCA, defines an “owner or operator” as a “person” who owns, leases, operates, controls, or supervises a point source. Section 75-5-103(25), MCA, defines “person” to include a political subdivision of the State. Read together, those definitions bring a county within the class of entities that may constitute an owner or operator under the MWQA; they do not grant a county authority to regulate others. The Legislature also authorized DEQ to adopt rules authorizing general permits for categories of point-source discharges. Section 75-5-401(9), MCA. DEQ’s rules identify portions of Yellowstone County as a regulated small MS4 and require an owner or operator of a regulated small MS4 to obtain MPDES permit coverage. Admin. R. M. 17.30.1102(23), -1105(1), (2) (2022). Because Yellowstone County is the political subdivision that owns or operates the regulated small MS4, the permit requirement applies directly to the County. Section 75-5-605(2), MCA, prohibits the County from using an outlet or discharging wastes into state waters without a current permit. These provisions therefore impose a legal duty on Yellowstone County to obtain permit coverage for its own MS4 discharges. Section 7-5-2101(2), MCA, authorizes the County to perform otherwise lawful acts required to satisfy that duty, but neither the MWQA’s definition of “person” nor the permit obligation supplies coercive authority over third parties that Montana law does not otherwise provide. 9 ¶21 Federal law likewise requires storm water controls. Congress directed the EPA to regulate additional storm water discharges as necessary to protect water quality and required municipal storm water permits to contain controls that reduce pollutant discharges to the maximum extent practicable. 33 U.S.C. § 1342(p)(3)(B)(iii), (p)(6). The EPA implemented that command by requiring regulated small-MS4 permits to include the six minimum control measures described above. 40 C.F.R. § 122.34(a), (b) (2022). Montana adopted the same six measures for its MPDES small-MS4 program. Admin. R. M. 17.30.1111(5), (6) (2022); Upper Mo. Waterkeeper, ¶ 24. ¶22 The County reads the phrase “to the extent allowable under state or local law” correctly but applies it too broadly. The phrase does not grant authority. It recognizes that the permittee must derive authority from state or local law. The federal and Montana rules attach that limitation to particular ordinance or regulatory-mechanism components of three measures: illicit-discharge detection and elimination, construction-site storm water runoff control, and post-construction management. 40 C.F.R. § 122.34(b)(3)(i)(B), (b)(4)(i)(A), (b)(5)(i)(B) (2022); Admin. R. M. 17.30.1111(6)(c)(ii)(B), (6)(d)(ii)(A), (6)(e)(iii) (2022). The limitation prevents DEQ from compelling the County to adopt an ordinance or other regulatory mechanism that Montana law does not authorize. More generally, neither the rule nor the permit can confer inspection, sanctioning, or other coercive authority that Montana law withholds. It does not erase the remaining components of those measures, the other three minimum measures, or the County’s underlying obligation to implement the program through lawful means. The phrase limits the available means of compliance; it does not eliminate the permit obligation. 10 ¶23 The federal and state schemes confirm that distinction. A permittee may rely on another entity to implement a minimum control measure when the other entity agrees and implements a measure at least as stringent as the permit requires. 40 C.F.R. § 122.35(a) (2022). The permittee remains responsible for compliance if the other entity fails to implement the measure. 40 C.F.R. § 122.35(a) (2022). The permitting authority also may recognize in the permit that another governmental entity is responsible under an NPDES permit for implementing a measure, or that the permitting authority itself is responsible, in which case the permittee need not include that measure in its own storm water program. 40 C.F.R. § 122.35(b) (2022). Montana’s rule likewise permits a small MS4 to share responsibility for implementing a minimum control measure. Admin. R. M. 17.30.1111(7) (2022). Under that arrangement, the MS4 remains responsible for compliance if the other entity fails to implement the measure. Admin. R. M. 17.30.1111(7)(c). DEQ also may specify in an MPDES permit that another governmental entity is responsible for implementing one or more minimum control measures, in which event the small MS4 need not include those measures in its program. Admin. R. M. 17.30.1111(8) (2022). DEQ may later modify the permit to require the MS4 to implement a measure if the designated entity fails to do so. Admin. R. M. 17.30.1111(8) (2022). For illicit-discharge control, the 2022 MS4 General Permit expressly directs permittees that lack ordinance authority to use written policies and procedures to exert their lawful authority over employees, contractors, the traveling public, and other MS4 users. 2022 MS4 General Permit at 13. These provisions authorize alternatives; they do not establish that any particular alternative is available to the County without the required agreement or determination. 11 ¶24 Yellowstone County possesses express and implied authority applicable to parts of the required program. Sections 7-5-2101(1) and (2), MCA, authorize it to manage County property and business and to perform otherwise lawful acts required by law. Sections 7-14-2101 through -2103, MCA, authorize it to control, manage, and maintain County roads. It also possesses statutory authority over subdivisions and subdivision drainage. Section 76-3-501(1)(f), (1)(i), MCA. It may make contracts necessary to the exercise of its powers and enter interlocal agreements for activities that a participating public agency is authorized by law to perform, subject to the required approvals. Sections 7-1-2103(3), 7-11-104, MCA. If it follows the governing statutory requirements, it also may pursue mechanisms such as a local water-quality district. See §§ 7-13-4501 through -4523, MCA; § 75-5-311, MCA. A local water-quality district also remains subject to the approval requirements and substantive limits in § 75-5-311, MCA; its creation does not supply unrestricted authority over all storm water sources. Those sources do not confer unlimited authority. They establish that the County is not powerless. ¶25 The County’s subdivision regulations illustrate both points. Section 4.7 of the 2019 Amended Yellowstone County Subdivision Regulations requires storm drainage facilities in subdivisions to comply with DEQ standards, requires storm water collection and conveyance systems, authorizes retention or detention requirements, and integrates DEQ storm water permitting into County subdivision review. 2019 Amended Yellowstone County Subdivision Regulations § 4.7. Those provisions illustrate lawful means of addressing storm water within the County’s subdivision authority. They do not establish that subdivision regulation alone satisfies every component of the challenged minimum 12 measures. Their statutory source and limited scope, however, do not support plenary, countywide regulation of every third party. The enforcement provisions of Section 11.7 apply to violations of the Montana Subdivision and Platting Act and the County’s subdivision regulations. 2019 Amended Yellowstone County Subdivision Regulations § 11.7. They do not establish an unlimited countywide storm water police power. ¶26 The scope of this appeal therefore matters. We reject the County’s contention that its asserted lack of comprehensive third-party regulatory authority excuses implementation of the challenged minimum control measures. The rule itself limits the ordinance and regulatory-mechanism requirements to the extent allowable under state or local law. We do not hold that the County possesses every power that a particular proposal might require, that another entity necessarily will agree to perform a measure, or that the County’s existing program satisfies its permit. Those questions require examination of the particular requirement, the asserted limits of authority, and the applicable permit provisions. ¶27 We therefore affirm summary judgment to DEQ on the County’s authority claim on the following ground: Yellowstone County must obtain MPDES permit coverage and must satisfy the storm water requirements for which its permit makes it responsible through one or more lawful means. Depending on the particular control measure and the County’s statutory authority, those means may include policies, contracts, subdivision or development-review mechanisms, ordinances, intergovernmental arrangements, shared-responsibility agreements, and other mechanisms that Montana law authorizes and the permit allows. The County must use the powers it lawfully possesses; DEQ cannot require it to exercise a power it does not possess. This holding does not determine the 13 County’s compliance with any particular permit condition or permit the County to disregard an applicable requirement based solely on its own assertion that it lacks authority. A challenge to a particular permit condition or regulatory mechanism would require the parties and the court to identify the specific act demanded, the asserted statutory source of authority, any applicable statutory limitation, and the lawful alternatives available under the permit. ¶28 2. Whether the requirements of Admin. R. M. 17.30.1111(6) (2022) constitute an unfunded mandate under § 1-2-112, MCA. The federal-statute exception defeats the categorical unfunded-mandate claim ¶29 The County presented evidence that its compliance efforts have required substantial expenditures. We do not minimize that evidence or characterize the County’s funding concern as insubstantial. Section 1-2-112(1), MCA, applies by its terms to “a law enacted by the legislature” that imposes specified new local-government duties without providing a means of financing them. The challenged requirements arise immediately from an administrative rule and permit issued under legislative authority. We need not decide whether every administrative rule or permit condition falls within the threshold language of § 1-2-112(1), MCA. We assume without deciding that the statute applies because the federal-statute exception resolves the categorical claim before us. ¶30 The statutory wording matters. Section 1-2-112(4)(a), MCA, excludes mandates required of local governments “as a matter of constitutional law or federal statute” or considered necessary for local-government operations. The Legislature wrote “federal statute,” not the broader term “federal law.” Because the EPA’s six minimum control 14 measures appear in a federal regulation, the analysis must trace those requirements to Congress’s statutory command rather than treat every federal administrative requirement as self-evidently within the exception. ¶31 That statutory connection exists for the core MS4 requirements. Congress directed that permits for municipal storm water discharges “shall require controls” reducing pollutants to the maximum extent practicable, including management practices, control techniques, system-design and engineering methods, and other appropriate provisions. 33 U.S.C. § 1342(p)(3)(B)(iii). Congress also directed the EPA to regulate additional storm water discharges as necessary to protect water quality, which resulted in the Phase II small-MS4 program. 33 U.S.C. § 1342(p)(6); Upper Mo. Waterkeeper, ¶ 5. The EPA’s regulations identify the six minimum measures that implement that statutory mandate. Federal regulations require state permitting authorities to issue permits consistent with 40 C.F.R. §§ 122.32 through 122.35 and either to include the requirements of §§ 122.33 through 122.35 in the permit or to develop permit limits based on the permit application. 40 C.F.R. § 123.35(d), (f) (2022). Montana therefore could choose how to formulate the permit limits, but it could not omit the federally required small-MS4 controls. Montana adopted those minimum measures essentially verbatim. Upper Mo. Waterkeeper, ¶ 24. The County’s federal permitting obligation does not depend on Montana’s decision to administer the program. Federal regulations require a regulated small-MS4 operator to obtain coverage from the authorized state permitting authority or, where no authorized state program exists, from the EPA. 40 C.F.R. § 122.33(a) (2022). Federal statute therefore requires the core obligation to obtain permit coverage and implement municipal storm 15 water controls; the six minimum control measures constitute the binding regulatory implementation of that statutory command. ¶32 The County again relies on the “to the extent allowable” qualification. That qualification does not make an unavailable county power available, and § 1-2-112(4)(a), MCA, does not authorize DEQ to compel an act that Montana law forbids. The qualification instead defines how the federal mandate operates when a permittee lacks one particular regulatory tool. The permittee must implement the measure through the authority it possesses unless the permitting authority recognizes another governmental entity as responsible. The permittee also may rely on another entity when the conditions governing shared responsibility are satisfied. A limitation on one means of compliance does not transform the federally required permit and storm water program into an optional undertaking. ¶33 Department of Finance v. Commission on State Mandates does not compel a different conclusion, although it illustrates why we state our holding narrowly. The California Supreme Court considered particular permit conditions that federal law did not specifically compel and for which the State retained a true implementation choice. Dep’t of Fin. v. Comm’n on State Mandates, 1 Cal. 5th 749, 765, 767–72, 378 P.3d 356, 368–72 (2016), modified on denial of reh’g (Nov. 16, 2016). The challenged conditions required particular inspections and transit-stop trash receptacles; the court did not consider the six minimum control measures prescribed for small MS4s by 40 C.F.R. § 122.34(b). Yellowstone County has not isolated a comparable Montana-only condition in this appeal. It challenges the six federally prescribed minimum measures categorically. DEQ’s 16 implementation and enforcement of those federally required measures through Montana’s delegated MPDES program do not, without more, transform them into state-imposed mandates under § 1-2-112, MCA. Federal regulations nevertheless allow permitting authorities to impose more stringent or additional terms when necessary to protect water quality. 40 C.F.R. § 122.34(c) (2022). A particular state-added best management practice, inspection requirement, sanction, or other condition that federal law does not compel could present a different unfunded-mandate question. We do not decide that here. ¶34 Because the federal-statute exception resolves the County’s claim concerning the federally required minimum control measures, we do not address the District Court’s alternative reliance on the constitutional-mandate and operational-necessity exceptions in § 1-2-112(4)(a), MCA. CONCLUSION ¶35 Yellowstone County must obtain permit coverage for discharges from its regulated small MS4 and must implement, through mechanisms authorized by Montana law, the storm water measures for which its permit makes the County responsible, as part of a program designed to reduce pollutant discharges to the maximum extent practicable. DEQ may not use an administrative rule or permit to manufacture county power that the Constitution and Legislature have not provided or necessarily implied. The phrase “to the extent allowable under state or local law” protects that structural limitation while preserving the County’s underlying obligation to comply through lawful means. Section 1-2-112, MCA, does not suspend the core obligations that federal statute imposes. We do not decide whether any particular ordinance, inspection requirement, sanction, or 17 additional permit condition exceeds the County’s authority or constitutes an unfunded mandate. We affirm the District Court’s grant of summary judgment to DEQ and denial of the County’s motion. ¶36 Affirmed. /S/ KATHERINE M. BIDEGARAY We Concur: /S/ JAMES JEREMIAH SHEA /S/ BETH BAKER /S/ INGRID GUSTAFSON /S/ JIM RICE 18