In re In re Crow Water Compact

• Decision Date: 30 December 2015
• Docket Number: No. DA 15–0370.,DA 15–0370.
• Citation: In re In re Crow Water Compact, 382 Mont. 46, 364 P.3d 584 (Mont. 2015)
• Parties: In re the CROW WATER COMPACT. In the Matter of the Adjudication of Existing and Reserved Rights to the Use of Water, Both Surface and Underground, of the Crow Tribe of Indians of the State of Montana.
• Court: Montana Supreme Court

382 Mont. 46

364 P.3d 584

In re the CROW WATER COMPACT.

In the Matter of the Adjudication of Existing and Reserved Rights to the Use of Water, Both Surface and Underground, of the Crow Tribe of Indians of the State of Montana.

No. DA 15–0370.

Supreme Court of Montana.

Submitted on Briefs Oct. 21, 2015.

Decided Dec. 30, 2015.

For Appellants: W. Scott Green, John C. Vannatta, Patten, Peterman, Bekkedahl & Green, PLLC, Billings, Montana.

For Appellee Apsaalooke (Crow) Tribe: Nathan A. Espeland, Espeland Law Office, PLLC, Columbus, Montana, Merrill C. Godfrey, Akin Gump Strauss Hauer & Feld, LLP, Washington, DC.

For Appellee United States: John C. Cruden, Assistant Attorney General, John L. Smeltzer, Appellate Attorney, United States Department of Justice, Washington, DC.

For Appellee State of Montana: Timothy C. Fox, Montana Attorney General, Jeremiah D. Weiner, Assistant Attorney General, Helena, Montana.

Chief Justice MIKE McGRATHdelivered the Opinion of the Court.

¶ 1Objectors to the Crow Water Compact appeal from the Montana Water Court's orders of December 24, 2014, and May 27, 2015, ruling in favor of the settling parties' motion for summary judgment and approving the Water Compact with a final order.

¶ 2We affirm the decision of the Water Court.

ISSUES

¶ 3We restate the issues on appeal as follows:

¶ 4 Issue One: Did the Water Court apply the proper legal standard of review in approving the Compact in the final order?

¶ 5 Issue Two: Did the Objectors meet their burden of proof under the standard of review applied to compacts?

¶ 6 Issue Three: Did the Crow Compact negotiation process violate the Objectors' due process rights?

BACKGROUND

¶ 7This case represents the second appeal from the Crow Water Compact, an agreement to distribute and manage water rights among the United States, the Crow Tribe and the State of Montana("Settling Parties").The Crow Tribe, the United States through the Department of the Interior, and the Montana Reserved Water Rights Compact Commission agreed to the terms of the Compact in 1999, and the Montana Legislature ratified it the same year.The Compact is codified at § 85–20–901, MCA.The Crow Tribe ratified the Compact by vote of its members in 2011.We recently discussed the facts pertaining to the establishment and history of the Crow Water Compact in a previous appeal, and they will not be repeated here.In re Crow Water Compact,2015 MT 217, 380 Mont. 168, 354 P.3d 1217("Crow I ").

¶ 8 This appeal arises from the concerns of individual Objectors to the Water Compact.The Objectors in this case are not parties to the Compact, however, some of the Objectors own land and water rights within the exterior boundaries of the reservation and assert that the Crow Compact will adversely affect their interests.

¶ 9 In 2012, the Water Court entered a preliminary decree containing the terms of the Compact.After sending notice to over 16,000 persons and entities, the Water Court received approximately 100 objections.Fifteen Objectors remain.

¶ 10 Pursuant to § 85–2–702(3), MCA, the Compact must be published upon ratification and "must be included in the preliminary decree as provided by 85–2–231, and unless an objection to the Compact is sustained under 85–2–233, the terms of the Compact must be included in the final decree without alteration."The Water Court approved the Crow Water Compact in a final decree on May 27, 2015.

¶ 11 The purpose of the Compact was to establish the water rights of the Crow Tribe relative to the rights of the state of Montana and the United States.Crow I,¶ 17–18.These water rights are quantified using the Practicably Irrigable Acreage standard (PIA).SeeState ex rel. Greely v. Confederated Salish & Kootenai Tribes,219 Mont. 76, 92, 712 P.2d 754, 764(1985);In re General Adjudication of All Rights to Use Water in the Gila River System and Source,201 Ariz. 307, 316–17, 35 P.3d 68, 77–78(Ariz.2001).During the Compact negotiations, the Settling Parties differed on the extent of PIA (and thus the amount of water) the Tribe was entitled to under Winters v. United States,207 U.S. 564, 577–78, 28 S.Ct. 207, 52 L.Ed. 340(1908).The Settling Parties sought to protect their respective interests without obtaining an expensive and time-consuming survey or years of complex litigation.

¶ 12 The Tribal Water Rights are articulated by basin in Article III of the Compact.First, it was established that the Tribe has a 500,000 acre feet per year (AFY) natural flow right from the Big Horn River Basin.Additionally, the United States conditionally granted the Tribe another 300,000 AFY, divided into two 150,000 AFY components, from its water right in Bighorn Lake.Second, the Compact states that the Tribe has "all surface flow, groundwater and storage" rights in the other basins covered by the Compact.Finally, the Tribe is also required to reserve 250,000 AFY of the Tribal Water Right between the Yellowtail Afterbay Dam and the Two Leggins diversion facility for the benefit of the fisheries and other recreational purposes.

¶ 13The Objectors raise the following issues on appeal: First, the Objectors contend that the Water Court did not apply the proper legal standard regarding their obligation to prove injury from the application of the Compact.Second, the Objectors raise several issues concerning the extent of their injury from the operation of the Compact.Third, the Objectors claim that their due process rights were violated during the Compact negotiation process.We have restated the issues for clarity and brevity and collapse all the objections concerning water rights in the Compact under Issue Two.We do not reach whether the Objectors are entitled to attorneys' fees under the Private Attorney General Doctrine because the appeal affirms the Water Court's order.

STANDARD OF REVIEW

¶ 14This Court applies the same standards of review to decisions of the Water Court as it does to decisions of a district court.Mont. Trout Unlimited v. Beaverhead Water Co.,2011 MT 151, ¶ 16, 361 Mont. 77, 255 P.3d 179.This Court reviews the Water Court's findings of fact under the clearly erroneous standard.

Weinheimer Ranch v. Pospisil,2013 MT 87, ¶ 19, 369 Mont. 419, 299 P.3d 327.This Court reviews the Water Court's conclusions of law de novo to determine whether they are correct.Skelton Ranch v. Pondera Co. Canal & Res. Co.,2014 MT 167, ¶ 26, 375 Mont. 327, 328 P.3d 644.

DISCUSSION

¶ 15Issue One: Did the Water Court apply the proper legal standard of review in approving the Compact in the final order?

¶ 16The Objectors maintain that the Water Court committed reversible error in holding that the Objectors must show "material injury" before the Court could rule the decree unreasonable.The Objectors argue that they only need to show "good cause" or that the Compact is not "fundamentally fair, adequate and reasonable and conform[ing] to the law."Officers for Justice v. Civil Serv. Comm.,688 F.2d 615, 625(9th Cir.1982).

¶ 17The Objectors confuse the standard for filing the initial objection with the standard for ultimately declaring the Compact to be unreasonable.Pursuant to § 85–2–233(1), MCA, Objectors need only show "good cause" to trigger the requirement for the Water Court to hold a hearing on the objection to the Compact.Additionally, under § 85–2–233(4), MCA, "[o]bjections ... must specify the paragraphs and pages containing the findings and conclusions to which objection is made.The request must state the specific grounds and evidence on which the objections are based."However, "good cause" is not the standard the Water Court should apply in determining the ultimate reasonableness of the Compact itself.

¶ 18 In Crow Iwe noted the correct standard in reviewing objections to compacts:

[T]he court's intrusion upon what is otherwise a private consensual agreement negotiated between the parties to a lawsuit must be limited to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.

Officers for Justice,688 F.2d at 625.Furthermore, the Water Court has in previous cases adopted complementary standards in addition to Officers for Justice in reviewing water compacts.In the Matter of the Adjudication of the Existing and Reserved Rights to the use of Water both Surface and Underground, of the Chippewa Cree Tribe of the Rocky Boy's Reservation within the State of Montana, WC–2000–01, Mem. Op. at 6, 2002 WL 34947007(Mont.Water Ct.June 12, 2002)(hereinafter Chippewa Cree );In the Matter of the Adjudication of the Existing and Reserved Rights to the use of Water both Surface and Underground, of the Assiniboine and Sioux Tribes of the Fort Peck Indian Reservation within the State of Montana in Basins 40E, 40EJ, 400, 40Q, 40R & 40S,WC–1992–01, Mem. Op. at 7, 2001 WL 36525512(Mont.Water Ct.August 10, 2001)(hereinafter Fort Peck ).In cases in which the objector was a non-party to a compact, the Water Court first assesses whether "the decree was the product of good faith, arms-length negotiations," and if so, the "negotiated decree is presumptively valid and the objecting party has a heavy burden of demonstrating that the decree is unreasonable."United States v. Oregon,913 F.2d 576, 581(9th Cir.1990)(internal citations and quotations omitted).Thus, if the court finds that "the decree was the product of good faith, arms-length negotiations," the burden of proof on the objector changes and it must show that the decree is unreasonable.Oregon,913 F.2d at 581.The Water Court has in previous water compact cases articulated that the "heavy burden"the objector must show is that its interests are "materially injured by operation of the Compact."Chippewa Creeat 6;Fort Peckat 7.In this case, the Water Court applied the analysis as articulated above; we conclude that there is no error...