Last year, Jay and Cindy Moccio bought a new home in the Prestige at Red Fox Meadows development, north of East Helena. They moved in in May 2024, just after construction was completed. They say theyve been very happy so far but last month, they got some concerning news.

I was shocked, said Cindy Moccio.

Watch the video to see more about the change impacting Prestige residents:

Homeowners worried after state warns subdivision's water rights aren't secure

They and other Prestige residents received letters from the Montana Department of Natural Resources and Conservation, telling them that their homes didnt qualify for the groundwater use permits they thought theyd receive.

The owners of the 29 lots in that subdivision are now part of a statewide group of homeowners whove found themselves in a legal limbo, as DNRC says the state has had to change the way it regulates water rights for certain developments.

Who I feel sorry for is some of the builders who are building homes right now and now they can't sell them, people also maybe want to sell their homes and now they can't sell them or if, God forbid, something happens to my husband and myself, we've left our home to someone, and then they can't sell it, Cindy Moccio said. It's not right.

On Wednesday, the Moccios and other frustrated Prestige homeowners attended a meeting at DNRC headquarters in Helena, where department staff tried to explain the issue and offer options.

Im terribly sorry that we actually have to be here in this room today, said Anna Pakenham Stevenson, administrator of DNRCs Water Resources Division.

The situation affects subdivisions that use the states exempt well process to secure water rights, which allows relatively small projects to move forward without going through the full process of getting a groundwater permit. If a development uses less than 10 acre-feet of water per year, it can use an exempt well. DNRC estimates a typical two-bedroom home uses about one-quarter of an acre-foot per year.

However, a 2024 court ruling required DNRC to change how it handles exempt wells. The environmental group Upper Missouri Waterkeeper sued the department and Broadwater County over the planned Horse Creek Hills subdivision, near the east shore of Canyon Ferry Lake. Waterkeeper was joined by neighboring landowners, who worried the developments wells would threaten their existing water rights.

In 2024, Judge Michael McMahon blocked the subdivision, ruling that the state cant let each phase of a multi-stage development use its own exempt well. Instead, he said, they must analyze all parts of the development as one combined appropriation of water.

DNRC leaders have pointed to the ruling, saying they now have to more closely analyze whether two proposed wells are actually a combined appropriation. In this case, they determined Prestige would have to share an allotment with 126 lots in the neighboring Red Fox Meadows development.

During Wednesdays meeting, department staff told homeowners those 126 lots are grandfathered into their current water allotments because of a 2014 court ruling and subsequent legislation. They said the land that eventually became Prestige was originally grandfathered in for 10 acre-feet of its own, but that that allocation was no longer protected once the land was further subdivided. In the end, that meant there wasnt any water left in the allocation for the newer homes.

Another issue leading to this situation is that DNRC argues it doesnt officially award a water right for an exempt well until after a development starts using the water. The department gave subdivision review letters at the beginning of the process, but said those did not guarantee a future water right.

Pakenham Stevenson said Wednesday that DNRC had identified 12 subdivisions around the state that were affected by this legal change, and for eight of them including Prestige the challenges werent immediately obvious to solve. The most likely solutions she pointed to were trying to go through the water permit process which could be costly and would require finding someone who holds existing water rights and was willing to transfer them to offset Prestiges use or asking the Montana Legislature to provide a new exemption for developments in this situation.

The DNRC, the executive is working with the Legislature on this problem because it's becoming very, very poignant right now, and it's impacting a lot of people across the state, Pakenham Stevenson said.

The 2025 Legislature did approve House Bill 681, which will move the official analysis of water rights to the start of the subdivision process for future developments. They did not pass Senate Bill 358, which would have included a provision to grandfather in exempt wells for these affected subdivisions.

Pakenham Stevenson told homeowners wondering whether their water might be shut off that DNRC would only investigate a potential water right violation in response to a complaint from the public. She said they are currently focused more on getting these subdivisions into compliance voluntarily.

During the meeting, a representative from Hamlin Construction and Development Co., the developer of Red Fox Meadows and Prestige, told homeowners the company had hired a water rights attorney and was looking at possible options for resolving this issue.

Waterkeeper, the organization behind the lawsuit, argues DNRC shouldnt be pointing at them over this issue and that the law was clear that the department wasnt following proper procedure.

The agency needs to step up, said John Tubbs, who chairs Waterkeepers board. And don't blame the litigation start finding solutions.

Tubbs was director of DNRC for eight years under Gov. Steve Bullock. He argues the departments current leadership has put too much development through the exempt well process a process that doesnt require a groundwater investigation or allow for neighboring water users to raise objections before a well begins drawing water. He said, instead of looking to grandfather in more exceptions, the state should be putting more resources into encouraging development through the regular water permit process.

I feel for the people who have purchased properties under the developers understanding that that exceptions would be available, said Tubbs. Horse Creek was decided more than a year ago, so there's been plenty of time for developers to understand that those exceptions don't apply.

Cindy Moccio said after Wednesdays meeting she wasnt satisfied with the answers shes heard so far.

We're all supposed to sit on pins and needles for the next year and a half, wondering what's going to happen to our homes that's not the solution, she said.

But she says shes remaining hopeful.

I'm still happy with my home, she said. I have every faith that this is going to get fixed.

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