HELENA, Mont. — The Montana Supreme Court has ruled against what conservationists call a loophole that allowed residential subdivision developers to draw a large amount of water from a limited source by drilling numerous small wells without a permit.

In a 6-1 decision Tuesday, the justices upheld a lower judge’s order striking down a regulation that resulted in about 3,000 permit-exempt water wells being drilled each year since 1993. There are now about 113,000 exempt wells across the state, and there would be 78,000 more by the end of the decade if the regulation stayed in place, the majority opinion written by Justice Laurie McKinnon said.

The Department of Natural Resources and Conservation has acknowledged concerns that the cumulative effect of all those wells is a reduction in groundwater levels and surface water flow, which could harm others who hold water rights in those areas. The issue is particularly sensitive in western Montana, where there has been a flurry of housing developments around closed water basins, where no surface water permits are allowed and groundwater permits receive close scrutiny.

“The loophole that existed amounted to a giveaway of our water resources in our state,” said Laura King, the attorney who represented the Clark Fork Coalition and four people who sued to strike down the regulation. “We are thrilled with the court’s decision and the fact that the court has realized that large water users can’t bypass the permitting process and drill a large number of wells.”

Under the court’s ruling, the state will revert to a cumbersome permitting system that will harm builders, homeowners and farmers, according to the Montana Association of Realtors.

“Exempt wells have served Montanans for years and the detailed scientific studies conducted determined that these exempt wells have virtually no impact on ground water and stream flows,” association CEO Taylor Oldroyd said.

The ruling will make it more difficult to develop larger subdivisions in Montana outside of city limits, Montana Building Industry Association executive director Steve Snezek said.

“The subdivisions that are going to happen are going to have to be more spread out,” Snezek said. “It’s going to lead to more sprawl.”

Montana’s water use law requires permits for all water wells, except for small wells that draw less than 35 gallons a minute and 10 acre-feet a year. But a “combined appropriation” of water by two or more of those small wells that exceeds the limit must receive a permit.

The dispute amounts to what state lawmakers meant by “combined appropriation.” Did it mean the wells have to be physically connected to count as a combined appropriation, or did it mean two unconnected small wells that are near each other and draw from the same water source should be regarded as a combined appropriation?

The regulation approved by the DNRC in 1993 determined that wells must be physically connected to be considered a combined appropriation. As a result, conservationists said, large residential subdivisions springing up in sensitive basin areas such as Gallatin and Ravalli counties in which each individual home in the development had its own small, exempt well.

Combined, all of those small wells started to have an effect on nearby senior water rights users, King said.

“They were seeing their springs and wells start to dry out,” King said.

McKinnon wrote in the Supreme Court’s majority opinion that state law is clear that “combined appropriation” means the total amount of water that may be taken without a permit, and not whether the wells are physically connected. The 1993 DNRC rule unacceptably contradicts the law the agency is trying to administer, McKinnon wrote.

Justice Jim Rice dissented with the majority opinion. He wrote that the law is not clear about what is meant by combined appropriation, and the court should show deference to the state agency’s interpretation.

DNRC director John Tubbs said the agency’s operations have been in line with the court’s order since October 2014, when District Judge Jeffrey Sherlock first ruled against the 1993 regulation on combined appropriations.

However, the ruling will not apply to thousands of properties that were subdivided prior to 2014 and have not yet been developed, Tubbs said.

State lawmakers may revisit the issue in the legislative session that begins in January. The Water Policy Interim Committee is scheduled to discuss a bill draft on the definition of combined appropriation next month.