No. 85-603
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
BURLINGTON NORTHERN RAILROAD COMPANY,
Petitioner and Appellant,
MONTANA DEPARTMENT OF PUBLIC SERVICE
REGULATION, PUBLIC SERVICE COMMISSION,
THOMAS J. SCHNEIDER, CLYDE T. JARVIS,
JOHN DRISCOLL, HOWARD ELLIS AND DANNY
OBERG ,
Respondents and Respondents.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Charles Luedke, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Crowley Law Firm; Michael E. Webster argued, Billings,
Montana
For Respondent:
Clay R. Smith argued, Asst. Attorney General, Helena,
Montana
Submitted: M ~ Y 1 4 1 1986
Decided: June 5 , 1986
*,
Clerk
4 1
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
After a hearing and submission of briefs, the Montana
Public Service Commission (PSC) dismissed a petition by
Burlington Northern Railroad Company (BN) to close its opera-
tion at Lodge Grass, Montana. The dismissal was based on the
PSC's conclusion that it lacked jurisdiction. Lodge Grass is
on the Crow Indian Reservation. BN sought review in the
District Court for Yellowstone County, and the court affirmed
the PSC's order. We reverse.
The issue is whether the PSC properly determined that it
does not have regulatory jurisdiction over the proposed
closure of the Lodge Grass Station.
BN's predecessor, Big Horn Southern Railroad Company,
was granted a right-of-way through the Crow Indian Reserva-
tion by Act of Congress in 1889. The purpose of the right-
of-way was " for the construction, operation, and maintenance
of [Big Horn ' s] railroad, telegraph, and telephone
lines . . ." Section 3 of the Act provided in part that "the
surveys, construction, and operation of such railroad shall
be conducted with due regard for the rights of the Indians,
and in accordance with such rules and regulations as the
Secretary of the Interior may make to carry out this
provision. . ." The Act was amended in 1893 to expand the
time frame for construction and to modify the legal descrip-
tion of the right-of-way. The Lodge Grass station was con-
structed on the right-of-way, and BN eventually succeeded to
Big Horn's interest under the 1889 and 1893 Acts.
In 1981, BN requested authority from the PSC to discon-
tinue its station at Lodge Grass. The request was made under
A.R.M. S 38.4.301. The reasons given for the request were
the lack of business at Lodge Grass and the availability of a
station at Hardin to take over the Lodge Grass station's
remaining duties. On July 27, 1982, the PSC held a public
hearing on the proposed closure. There was testimony that
there had been no shipments into or out of the Lodge Grass
station for over two years. There was also testimony about
proposed Tribal business ventures which would use the sta-
tion. At the end of the hearing, the PSC requested briefs on
whether it had jurisdiction to decide upon BN's application.
The Crow Tribe has since enacted a common carrier ordi-
nance. The ordinance was not relied upon by either the PSC
or the District Court in their decisions.
In concluding that it did not have jurisdiction over
BN's petition, the PSC found that: (1) Burlington Northern
had succeeded to Big Horn's interest under the 1889 and 1893
Acts; (2) the 1889 Act "provided generally that the survey-
ing, construction, and operation of the right-of-way was to
be subject to the approval and/or regulations of the Secre-
tary of Interior;" and (3) " [tlhe impact of the proposed
abandonment will fall predominantly, if not exclusively, on
the Lodge Grass agency and Tribal members dependent upon rail
service to that station." Relying on White Mountain Apache
Tribe v. Bracker (1980), 448 U.S. 136, 100 S.Ct. 2578, 65
IJ.Ed.2d 665, the PSC concluded that the propriety of its
asserting jurisdiction over BN's application involved balanc-
ing State and federal/tribal interests and that
federal/tribal interests predominated under these circum-
stances. The District Court affirmed this decision on
cross-motions for summary judgment.
The White Mountain Apache test applies where "a State
asserts authority over the conduct of non-Indians engaging in
activity on the reservation." White Mountain Apache, 448
U.S. at 144. BN argues that its interest in the railroad
right-of-way is in the nature of a fee interest, and that the
balancing test set out in White Mountain Apache does not
apply. BN's argument is not persuasive. The PSC cites
United States v. Soldana (1918), 246 U.S. 530, as authority
that the title of the Crow Tribe to the land within the Big
Horn (now BN) right-of-way was not extinguished when the
right-of-way wa.s created. We conclude that the Crow Tribe
retains an interest in the land underlying the right-of-way
and therefore, the White Mountain Apache balancing test
applies.
White Mountain A~ache concerned the State of Arizona's
efforts to apply its motor carrier license and use fuel taxes
to a non-Indian enterprise operating solely on the Fort
Apache Reservation. The Court held that the taxes were
pre-empted by federal law, but distinguished the process it
used to reach this conclusion from standard preemption analy-
sis. The Court held that:
[wlhen on-reservation conduct involving only Indi-
ans is at issue, state law is generally inapplica-
ble, for the State's regulatory interest is likely
to be minimal and the federal interest in encourag-
ing tribal self-government is at its strongest
(citations omitted) . More difficult questions
arise where, as here, a State asserts authority
over the conduct of non-Indians engaging in activi-
ty on the reservation. In such cases we have
examined the language of the relevant federal
treaties and statutes in terms of both the broad
policies that underlie them and the notions of
sovereignty that have developed from historical
traditions of tribal independence. This inquiry is
not dependent on mechanical or absolute conceptions
of state or tribal sovereignty, but has called for
a particularized inquiry into the nature of the
state, federal, and tribal interests at stake, an
inquiry designed to determine whether, in the
specific context, the exercise of state authority
would violate federal law (citations omitted).
White Mountain Apache, 448 U.S. at 144-45.
In White Mountain Apache a crucial factor in the balance
of State interests against federalltribal interests was the
comprehensive scheme of federal regulation of the harvesting
of Indian timber, in the form of Acts of Congress, detailed
Interior Department regulations, and day-to-day supervisj.on
by the Bureau of Indian Affairs. White Mountain Apache, 448
U.S. at 145-48. Also weighed in the Court's consideration
were the economic burden on the Tribe of the asserted taxes,
and the "significant geographical component of tribal sover-
eignty." White Mountain Apache, 448 U.S. at 151. On the
other side of the balance was the State's general interest in
raising revenue. White Mountain Apache, 448 U.S. at 150.
The Court held that the federalltribal interests outweighed
the State's 'interest, and the State was denied jurisdiction.
In the present case, in marked contrast, there is an
absence of federal regulation of railroad rights-of-way over
Indian land, although there is clearly authority for it. The
absence of regulatory action by both the federal government
and the Crow Tribe during a period of close to 100 years is
highly significant. It could even be called acquiescence, in
view of Montana1s 70 years of regulation of railroads, in-
cluding railroads running through this reservation. Montana
has enacted a comprehensive regulatory scheme governing all
railroads doing business in this state, at Title 69, Chapter
14, MCA.
Second, and also in contrast to White Mountain Apache,
the state jurisdiction sought here is regulatory jurisdiction
for the public good, not authority to tax. The PSC has the
same statutory obligation to consider the interests of the
Indian people of Montana and of the Crow Reservation as of
the non-Indian or off-reservation people.
We accept the finding that the impact of closure of the
Lodge Grass station would primarily affect tribal members,
because that finding is not clearly erroneous. - City of
See
Billings v. Billings Firefighters (Mont. 1982), 651 P.2d 627,
632, 39 St.Rep. 1844, 1849. However, because of the testimo-
ny that the station was not used for over 2 years preceding
BN's petition and was used very infrequently before that
time, we do not weigh this factor heavily.
Under White Mountain Apache we have weighed the interest
of the State, which is represented by more than 70 years of
comprehensive regulation of all railroads in Montana, both
on-reservation and off-reservation, as compared to the
federal/tribal interest, which is represented by an absence
of federal statutory or administrative regulation and an
absence of any action by the Crow Tribe in the nature of an
ordinance or other attempt to regulate the railroads on the
reservation. We emphasize that we are not ruling upon the
Crow Tribe's common carrier ordinance, which is not properly
before us. We conclude that the State's interest signifi-
cantly outweighs the federal/tribal interest. We therefore
reverse the decision of the PSC and the District Court. We
order the PSC to assume jurisdiction and to proceed to rule
upon BN's petition to close the Lodge Grass station.
We Concur:
Mr. Justice John C. Sheehy, concurring specially and
dissenting:
I agree of course that some governmental entity must
have jurisdiction of subject matter here, the proposed
closure of the railroad sta.tion at Lodge Grass, and that at
the time of the proceedings here, the PSC had that
jurisdiction.
In the meantime though, the Crow tribe has adopted a
regulatory ordinance applying to railroads which is the
subject of an action in the federal district court to
determine its validity. Immediately upon remand by us to the
PSC for further action relating to the closure, the question
will undoubtedly arise whether, in view of the adoption of
the tribal ordinance, the PSC has any further jurisdiction,
or whether it properly belongs in the Crow tribe.
Undoubtedly the federal district court will be called upon to
decide that issue. Anticipating this, I would stay the
effect of our decision here until a final determination is
made in the federal district court as to whether the Crow
tribe now has exclusive jurisdiction of the proposed closure
under the tribal ordinance. In that way, we would avoid a
potential conflict between the federal and state courts in
this matter.
ch4-4 Justice