Cheyenne River Sioux Tribe Telephone Authority v. Public Utilities Com'n of S.D., Nos. 20062

• Court: Supreme Court of South Dakota
• Writing for the Court: MILLER
• Citation: 1999 SD 60,595 N.W.2d 604
• Parties: CHEYENNE RIVER SIOUX TRIBE TELEPHONE AUTHORITY and US West Communications, Inc., Appellants, v. PUBLIC UTILITIES COMMISSION OF SOUTH DAKOTA, Appellee, and Corson County Commission, and McIntosh City Council, Intervenors, and Doug Scott, Intervenor and Appellee.
• Decision Date: 19 May 1999
• Docket Number: Nos. 20062,20464

Page 604

595 N.W.2d 604 1999 SD 60 CHEYENNE RIVER SIOUX TRIBE TELEPHONE AUTHORITY and US West
Communications, Inc., Appellants,
v.
PUBLIC UTILITIES COMMISSION OF SOUTH DAKOTA, Appellee,
and
Corson County Commission, and McIntosh City Council, Intervenors,
and
Doug Scott, Intervenor and Appellee. Nos. 20062, 20464. Supreme Court of South Dakota. Argued Jan. 13, 1999.
Decided May 19, 1999.

Thomas J. Welk and Tamara A. Wilka of Boyce, Murphy, McDowell & Greenfield, Sioux Falls, South Dakota, Attorneys for appellant US WEST.

Rochelle Ducheneaux, Gettysburg, South Dakota and Scott B. McElroy and Alice E. Walker of Greene, Meyer & McElroy, Boulder, Colorado, Attorneys for appellant Cheyenne River Sioux Tribe Telephone Authority.

Mark Barnett, Attorney General, Lawrence E. Long, Chief Deputy Attorney General, Pierre, South Dakota, Camron D. Hoseck, Special Assistant Attorney General, Public Utilities Commission, Pierre, South Dakota, Attorneys for appellee Public Utilities Commission of South Dakota.

Steven Aberle, Timber Lake, South Dakota, Attorney for appellee Doug Scott.

MILLER, Chief Justice.

¶1 The Public Utilities Commission (PUC) denied the proposed sale of three telephone exchanges from US WEST to the Cheyenne River Sioux Tribe Telephone Authority (CRSTTA). The circuit court affirmed PUC's decision. We likewise affirm.

FACTS

¶2 The Cheyenne River Sioux Tribe is a federally recognized Indian Tribe. CRSTTA, a wholly owned subsidiary of the Tribe, has provided phone service, among other things, principally on the Cheyenne River Sioux Reservation since 1958.

¶3 In early 1994, US WEST, a Colorado corporation which has provided telephone services for a number of years in South Dakota, offered sixty-seven local telephone exchanges for sale. A consortium of potential buyers, which included CRSTTA, was formed to bid on the exchanges. CRSTTA intended to purchase (through its subsidiary Owl River Telephone, Inc.) the Morristown, Timber Lake and Nisland exchanges. ¹

¶4 CRSTTA successfully bid on those exchanges ² and, on December 7, 1994, entered

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into a purchase agreement with US WEST. US WEST and the consortium filed a joint application with PUC for approval of the sale of the sixty-seven exchanges.

¶5 At the time of the proposed sales, no legislation explicitly required PUC approval of such sales. However, the 1995 Legislature passed Senate Bill 240, now codified at SDCL 49-31-59, which specifically required PUC approval of all sales of telephone exchanges. The legislation contained an emergency clause, and it became effective on March 30, 1995.

¶6 PUC applied the new law when considering the proposed sales of the telephone exchanges. Public hearings were held and, on July 31, 1995, PUC denied the sale of four of the sixty-seven exchanges: namely the three exchanges CRSTTA intended to purchase and the Alcester exchange. ³

¶7 US WEST and CRSTTA appealed PUC's decision. The court found that PUC had jurisdiction over the exchange sales, but reversed and remanded the decision finding that: (1) PUC improperly conditioned its approval upon CRSTTA's refusal to waive its sovereign immunity; (2) the decision was based upon PUC's erroneous conclusion that SDCL 49-1-17 prohibited approval of the proposed sales; and (3) PUC did not enter findings of fact on each of the statutory factors listed in SDCL 49-31-59.

¶8 On remand, PUC's staff moved for PUC to consider the matter on the record. CRSTTA and US WEST requested a reopening of the record to consider new evidence, such as the enactment of the Telecommunications Act of 1996, the election of a new PUC Commissioner, the certificate of convenience and necessity to operate issued by the Standing Rock Sioux Tribe, and CRSTTA's newly adopted dispute resolution mechanisms.

¶9 On May 7, 1997, PUC denied the motion to reopen the record. It also denied the motion to take judicial notice of CRSTTA's dispute resolution procedures and of Standing Rock Sioux Tribe's issuance of a provisional certificate of convenience and necessity.

¶10 On August 22, 1997, PUC again denied the sale of the exchanges. US WEST and CRSTTA appealed the decision to the circuit court, which affirmed PUC's findings of fact and conclusions of law.

¶11 On appeal to this Court, CRSTTA and US WEST present the following issues:

1. Whether PUC had jurisdiction over the sale of the portion of the Timber Lake exchange located on the Cheyenne River Sioux Indian Reservation.

2. Whether PUC's decisions denying CRSTTA's application to purchase the off-reservation portion of the Timber Lake exchange, the Morristown exchange, and the McIntosh exchange should be reversed pursuant to SDCL 1-26-36.

3. Whether PUC's refusal to approve the joint application regarding the telephone exchange sales based on its interpretation of SDCL 49-31-59 constitutes a denial of equal protection under the law in violation of the Fourteenth Amendment to the United States Constitution and Article VI, § 18, of the South Dakota Constitution.

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4. Whether PUC and the circuit court abused their discretion by failing to take judicial notice of a dispute resolution mechanism adopted by CRSTTA and a provisional certificate of convenience and necessity issued by the Standing Rock Sioux Tribe.

STANDARD OF REVIEW

¶12 SDCL 1-26-36 governs review of agency decisions. ⁴ This Court

makes the same review of the administrative agency's decision as did the circuit court, unaided by any presumption that the circuit court's decision was correct. Appeal of Templeton, 403 N.W.2d 398 (S.D.1987). When the issue is a question of fact, the actions of the agency are judged by the clearly erroneous standard. Application of Northwestern Bell Tel. Co., 382 N.W.2d 413 (S.D.1986). When the issue is a question of law, the actions of the agency are fully reviewable. Matter of State & City Sales Tax Liability, 437 N.W.2d 209 (S.D.1989). Mixed questions of law and fact are also fully reviewable. Permann v. Department of Labor, Unemp. Ins. Div., 411 N.W.2d 113 (S.D.1987).

Zoss v. United Bldg. Ctrs., Inc., 1997 SD 93, p 6, 566 N.W.2d 840, 843 (quoting Tieszen v. John Morrell & Co., 528 N.W.2d 401, 403-04 (S.D.1995) (citation omitted)).

DECISION

¶13 1. PUC had jurisdiction over the sale of the portion of the Timber Lake exchange located on the Cheyenne River Sioux Indian Reservation.

¶14 US WEST and CRSTTA argue that PUC's assertion of jurisdiction over the sale of the on-reservation portion of the Timber Lake exchange ⁵ infringed on the Tribe's right of tribal self-government, was barred by federal preemption, and violated well-established principles of federal Indian law. We disagree.

¶15 a. Infringement

¶16 CRSTTA and US WEST claim PUC lacked the authority to regulate CRSTTA's business activities within the boundaries of the Cheyenne River Sioux Indian Reservation. They claim that, by regulating such activities, PUC infringed on CRSTTA's exercise of tribal self-government.

¶17 Tribal governments "derive their powers of government from their inherent sovereignty and not by delegation from the federal government." Mexican v. Circle Bear, 370 N.W.2d 737, 740 (S.D.1985) (citing United States v. Wheeler, 435 U.S. 313, 98 S.Ct. 1079, 55 L.Ed.2d 303 (1978)). "Indian tribes exist as sovereign entities with powers of self-government." Id. at 740-41 (citations omitted). However, "[t]he principle of tribal self-government,

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grounded in notions of inherent sovereignty and in congressional policies, seeks an accommodation between the interests of the Tribes and the Federal Government, on the one hand, and those of the State, on the other." Washington v. Confederated Tribes, 447 U.S. 134, 156, 100 S.Ct. 2069, 2083, 65 L.Ed.2d 10, 31 (1980) (citation omitted).

¶18 CRSTTA and US WEST argue that, because the Tribe approved the transaction regarding the on-reservation portion of the Timber Lake exchange, PUC's exercise of authority over the transaction infringes on the Tribe's right to self-governance. They rely on Montana v. United States, 450 U.S. 544, 101 S.Ct. 1245, 67 L.Ed.2d 493 (1981), to support their position. We find their reliance to be misplaced.

¶19 In Montana, the Supreme Court stated that "exercise of tribal power beyond what is necessary to protect tribal self-government or to control internal relations is inconsistent with the dependent status of the tribes, and so cannot survive without express congressional delegation." Id. at 564, 101 S.Ct. at 1258, 67 L.Ed.2d at 509-10 (citing Mescalero Apache Tribe v. Jones, 411 U.S. 145, 148, 93 S.Ct. 1267, 1270, 36 L.Ed.2d 114, 119 (1973); Williams v. Lee, 358 U.S. 217, 219-20, 79 S.Ct. 269, 270, 3 L.Ed.2d 251, 253 (1959); United States v. Kagama, 118 U.S. 375, 381-82, 6 S.Ct. 1109, 1112-13, 30 L.Ed. 228, 230 (1886)). Furthermore, "the inherent sovereign powers of an Indian tribe do not extend to the activities of nonmembers of the tribe." Id. at 565, 101 S.Ct. at 1258, 67 L.Ed.2d at 510. However, "[a] tribe may regulate, through taxation, licensing, or other means, the activities of nonmembers who enter consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements." Id. (citing Williams, 358 U.S. at 223, 79 S.Ct. at 272, 3 L.Ed.2d at 255-56; Morris v. Hitchcock, 194 U.S. 384, 24 S.Ct. 712, 48 L.Ed. 1030 (1904) (citations omitted)). In addition, "[a] tribe may also retain inherent power to exercise civil authority over the conduct of non-Indians on fee lands within its reservation when that conduct threatens or has some direct effect on the political integrity, the economic security, or the health or welfare of the tribe." Id. at 566, 101 S.Ct. at 1258, 67 L.Ed.2d at 511.

¶20 CRSTTA and US WEST claim the Montana consent exception is applicable here because the Tribe entered into a consensual, contractual agreement with US WEST. They argue that, because of this agreement, the Tribe has jurisdiction over US WEST's...