State floats seizure of Laurel water as it pursues contested mental health facility

An attorney for the Montana Board of Investments mentioned the possibility of utilizing eminent domain to connect the state’s planned forensic mental health facility to the city of Laurel’s water and sewer supply during a court hearing Monday.

Such an option would avoid the annexation and public hearing process in a city where the project has garnered intense opposition. Instead, with eminent domain the state can forcibly use the city’s property for public use.

The state, in a past environmental assessment, wrote that “BOI plans to consent to annexation if the City of Laurel desires it.” Eminent domain wasn’t mentioned in that document.

“Annexation, your honor, is not meant to deprive, or to try to deprive, a particular entity from the receipt of services," attorney Christopher Stoneback told Judge Ed Zink when asked about whether annexation would be required. "It is designed more for the smooth, efficient provision of services. It is not a prerequisite, your honor. If it's not provided for … the state has eminent domain authority, and it can obtain the services for this needed facility if necessary.”

The city of Laurel has since told engineers for the project that they have water capacity concerns, and that the municipality “cannot answer whether it has adequate water capacity to meet these requirements,” according to a June 29 letter.

However, the state of Montana pointed out the city had asserted it had enough water when the council approved connecting a Love’s Truck Stop to the system in June 2025. The state has been aware of the nearby infrastructure improvement made for Love’s for nearly a year now as it pursued its initial 32-bed facility. 

“One of the site location criteria from the very outset was sufficient infrastructure,” Stoneback said. “The state of Montana has no intention to build a facility to which would be provided inadequate water or sewer services. That has been a requirement of site selection since the beginning, around the EA analysis and to today.”

Still, whether there’s enough water remains a point of contention among the state and Laurel, with an ongoing lawsuit by an opposition group, Laurel CARED, arguing that the environmental analysis was insufficient.

The assessment didn’t include a theoretical 4,680-gallons-per-day estimate of water use for the first phase of the project until it was finalized. This was double the 2,000-gallons-per-day estimate the state had previously received from an engineering analysis, according to the Montana Board of Investments.

The agency has stated the facility was designed to use less water overall.

Laurel CARED says it should get a chance to comment on the higher water use and other information before the state advances any further on the mental health building. 

“Nowhere in the (environmental analysis) or the administrative record that defendants produced is that water analysis showing that the specific engineering of this facility resulted in 2,000 gallons per day,” said Liz Forster, an attorney for Laurel CARED. “That is the type of reasoned explanation that MEPA (Montana Environmental Policy Act) requires. And in order to comply with MEPA, that had to be disclosed for the public to understand this explanation that defense counsel now provides that was not in the EA in the first place.”

The state says the newer estimate, using Montana Department of Environmental Quality modules, was made in response to public comment it had received. Stoneback considered the addition of the new estimate as the way the state environmental review process should function, with additions to the review made in response to public comment.

Laurel CARED wants a preliminary injunction on the state facility to prevent future assessed harms and to allow for further clarification of its plans.

“This environmental assessment, just for its water demand, is fundamentally flawed and cannot be upheld under MEPA, and the consequences of that are severe,” Forster said. “You either have a facility that is intended to serve vulnerable populations, not able to deliver them a basic necessity, or you're requiring the city of Laurel and its residents to forgo their water potentially to serve this facility. So either way, we're setting this facility up to fail.”

Meanwhile, the state of Montana plans to begin construction of the project west of Laurel in September.

“By delaying this facility ... there is no infusion of roughly $40 million into the local economy,” Stoneback told the judge. “There is no construction work. There is no development of a mental health care workforce in anticipation of the facility being located here. Construction costs, your honor, are going up.”

A fence has already been erected around portions of the 114-acre property. Attached is a sign telling councilors to vote against the possible annexation of the facility, though that vote might never arrive.

On Tuesday, after hearing about eminent domain, Laurel City Council – already considering a potential lawsuit against the state – said eminent domain heightened its need to retain land-use attorneys.

“We brought this forward prior to knowing that the state was even talking about eminent domain," Mayor Kris Vogele told councilors. "If the state truly is thinking about eminent domain of our public services, then these attorneys are going to be even more important for the city in order to provide you with options to let you know what options are out there.” 

According to Montana business filings, Vogele is also listed as a director for Laurel CARED, which is already suing the state. He replaced Mayor David Waggoner after Waggoner resigned in the face of a recall petition organized by the opposition group.

In July, the council extended an emergency halt on annexation over concerns around infrastructure. A source within the state considers the move as targeting the mental health facility.

As of Thursday afternoon, Judge Ed Zink hadn’t ruled. It’s the first environmental review case he has considered, he told attorneys Monday.

Evan Butow contributed reporting.