No. 86-270
I N THE SUPREME COURT O F T H E S T A T E O F MONTANA
1988
BUTTE-SILVER ROW LOCAL GOVERNMENT,
Petitioner,
-vs-
T H E S T A T E O F MONTANA; TREASURER O F
THE S T A T E O F MONTANA, DEPARTMENT O F
REVENUE O F T H E S T A T E O F MONTANA,
Respondents.
O R I G I N A L PROCEEDING:
COUNSEL O F RECORD:
For P e t i t i o n e r :
J a m e s H. G o e t z argued; G o e t z , M a d d e n & D u n n , Rozeman,
Montana
For R e s p o n d e n t :
Hon. M i k e G r e e l y , A t t o r n e y G e n e r a l , H e l e n a , M o n t a n a
C l a y R . S m i t h argued, A s s t . A t t y . G e n e r a l , H e l e n a
E r i c J . F e h l i g , D e p t . of R e v e n u e , H e l e n a , M o n t a n a
D o n a l d M a c I n t y r e , D e p t . of N a t u r a l R e s o u r c e s , H e l e n a ,
Bontana
3 -'
Submitted: December 2, 1358
Decided: January 1 9 , 1 9 8 9
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. "
Filed: .+ +-
ED S M I T H
Clerk
Mr. Justice L. C. Gulbrandson delivered the Opinion of the
Court.
This case involves a petition for assumption of
original jurisdiction filed pursuant to Rule 17, M.R.App.P.
Petitioners seek a declaratorv judgment declaring the Montana
Resource Indemnity Trust Act (1973), (the Act),
unconstitutional, insofar as it authorizes the expenditure of
Resource Indemnity Trust (Trust) funds for purposes other
than the reclamation of lands disturbed by the takinq of
natural resources. Petitioners also challenge the
constitutionality of respondents1 acts in appropriating and
expending Trust funds for purposes other than reclamation of
lands and contend such acts are a breach of respondents1
fiduciary duties as trustees of the Trust under
5 15-38-203 (2), MCA. We accept the case on original
jurisdiction, but find the Act is constitutional and that
respondents1 expenditures of Trust funds were authorized
under the Act.
The Butte-Silver Bow Local Government (Butte-Silver
Bow) filed its "Petition for Declaratory Judgment on Original
Jurisdiction1' with the Montana Supreme Court on June 13,
1986. The petition relies on Art. IX, sec. 2 as the
constitutional basis for its claim. On July 30, 1986,
petitioners Butte-Silver Bow sought leave to amend its
petition to include several individuals who would "suffer
serious adverse impacts in their environmental and aesthetic
well-being and quality of life if proper reclamation is not
undertaken in the City of Butte." Robert J. Pavlovich, Fritz
Daily, and Don R. Peoples were added "in their individual
capacities as citizens, residents, electors, and taxpayers of
Butte-Silver Bow Local Government."
After review of the briefs submitted, this Court
remanded the action to Montana's First Judicial District
Court, Lewis and Clark County, for determination of factual
issues. Particularly, this Court requested the District
Court to prepare findings of fact "as to the use and
expenditures made of monies derived from the Resource
Indemnity Trust Fund, through its interest earnings by the
various governmental agencies under the appropriations of the
T,egislature." The case is back before this Court upon the
agreed findings of fact of the parties adopted bv the
District Court.
Petitioners raise the following issues to this Court:
1. Do the petitioners have standj-ng and should this
Court assume original jurisdiction'
2. Is the Montana Resource Indemnity Trust Act,
S 15-38-101, et seq., MCA, unconstitutional for authorizing
the appropriation and expenditure of Trust funds for purposes
other than reclamation of lands?
3. Have respondents violated their fiduciary duties as
trustees by using Trust funds for purposes other than the
reclamation of lands?
4. Have respondents used Trust funds for general
agency operating expenses in violation of S 15-38-203(2),
MCA?
5. Are petitioners entitled to attorney's fees under
the common fund theory?
I.
Should original jurisdiction be granted?
Petitioners' standing to bring this action is essential
to the question of our acceptance of original jurisdiction.
This Court has previously held a registered voter has
standing where a constitutional provision is clearly intended
to benefit the public and the electorate, and by contending
the provision "has been the victim of legislative
strangulation." Committee for an Effective Judiciary v.
State (1984), 209 Mont. 105, 108, 679 P.2d 1223, 1225.
Further, a taxpayer will have standing to question the
validity of a tax, or the expenditure of the tax monies,
provided the issue (s) presented directly affect the
constitutional validity to collect or use the proceeds of the
tax by the state or a local government entity. Grossman v.
State, Dept. Natural Resources (1984), 209 Mont. 427,
438-439, 682 P.2d 1319, 1325. Individual petitioners meet
the criteria necessary to establish standing both as
registered voters and as affected taxpayers. Having found
the individual petitioners have standing, we decline to
address the question of petitioner Butte-Silver Row's
standing.
Once standing to bring the action is established, the
question shifts to whether the action meets the necessary
factors for this Court to accept original jurisdiction. This
Court has found that an assumption of original jurisdiction
is proper when: (1) constitutional issues of major state wide
importance are involved; (2) the case involves pure legal
questions of statutory and constitutional construction; and
(3) urgency and emergency factors exist making the normal
appeal process inadequate. State ex rel. Greely v. Water
Court, State of Montana (1984), 214 Mont. 143, 691 P.2d 833;
Rule 12, M.R.App.P. Moreover, this Court clearly stated the
Court has original jurisdiction to accept declaratory
judgment proceedings "where the issues have impact of major
importance on a statewide basis, or upon a major segment of
the state, and where the purpose of the declaratory judgment
proceedings will serve the office of a writ provided by law
. . ." Grossman v. State, Dept. of Natural Resources (1984),
3 0 9 Mont. 427, 436, 682 P.?d 1319, 1324.
This petition involves a constitutional issue of major
statewide importance. Petitioners are seeking an
interpretation by this Court of a section of the
Constitution, of a major act passed by the Legislature and a
determination of the existence or absence of conflicts
between the two. A decision in the petitioners' favor
clearly would have a major impact on the Legislature's
funding of a variety of state programs.
Additionally, this petition involves only legal
questions. All factual questions involving the disposition
of Trust monies, have been adequately addressed in the
District Court's findings of fact. The Court must determine
the legal question of the purposes for which trust funds may
or may not be utilized, and then may examine whether the
appropriations made by the Legislature were authorized.
Regarding the question of whether or not this case
presents sufficient urgency and emergency factors to require
the Court to exercise original jurisdiction, this Court has
stated:
Resolution of the issues presented herein
is necessary to eliminate or reduce a
multiplicity of future litigation;
... and to eliminate needless
expenditure of public funds on procedures
that otherwise might subsequently be
declared illegal. One of the basic
purposes of the Montana Declaratory
Judgment Act is to provide for advance
determination of such issues, thereby
eliminating these otherwise detrimental
results.
Grossman, 682 P.2d at 1322, citing Forty-Second Legislative
Assembly v. Lennon (1971), 156 Mont. 416, 420-422, 481 P.2d
330, 332-333. In light of the fact that the Legislature
convened on January 2, 1989, and it will undoubtedly fund
programs from the trust income which may or may not be
determined constitutional by this opinion, sufficient urgency
and emergency exists for exercising original jurisdiction.
Having found that petitioners have standing and that
the petition satisfies the three required factors, we assume
original jurisdiction.
Petitioners' advance three arguments on the issue of
whether or not the Montana Resource Indemnity Trust Act of
1973 violates Art. IX, sec. 2 of the 1972 Montana
Constitution. First, petitioners allege that the plain
language of Art. IX, sec. 2, provides the Trust fund shal-1
only be used for the reclamation of lands disturbed by the
taking of natural resources. Second, by placing the
amendments authorizing the Trust in Art. IX, sec. 2, the
people of the state of Montana have shown their intent that
use of the Trust funds be limited to reclamation of such
disturbed lands. Third, the Legislative history shows an
intent to limit Art. IX, sec. 2, to reclamation of lands
disturbed by the removal of natural resources.
When interpreting a constitutional provision, certain
tenets must be observed. The same rules of construction
which apply to determining the meaning of statutorv
provisions apply to constitutional provisions. Keller v.
Smith (1976), 170 Mont. 399, 404, 553 P. 2d 1002, 1006. The
intent of the framers of the provision is controlling.
Keller, 553 P.2d at 1006. However,
[Sluch intent shall first he determined
from the plain meaning of the words used,
if possible, and if the intent can be so
determined, the courts may go no further
and apply any other means of
interpretation. (Citations omitted.)
Keller, 553 P.2d at 1006. We therefore must decide whether
the plain language of Art. IX, sec. 2 clearly provides the
trust fund shall only be used for the reclamation of lands
disturbed by the taking of natural resources, or whether the
provision is ambiguous and in need of additional
interpretation. If the State Constitution does not provide
an express limitation on the legislative appropriation power
of the State, that power shall reside in the Legislature.
Board of Regents of Higher Education I T . Judge (19751, 168
Mont. 433, 446, 543 P.2d 1323, 1331.
The plain language of Art. IX, sec. 2 (1), which is the
reclamation section within the larger Environment and Natural
Resources Article, states:
All lands disturbed by the taking of
natural resources shall be reclaimed.
The legislature shall provide effective
requirements and standards for the
reclamation of lands disturbed.
Subsection (1) is a statement by the framers of the
Constitution that "[all1 lands disturbed by the taking of
natural resources shall be reclaimed" and that the
Legislature is directed to provide regulations and standards
for that reclamation. This subsection does not mention the
Trust or place any limitation upon use of Trust funds.
Additional subsections were added to sec. 2 by
Constitutional amendment in 1974 (following the 1973
legislative enactment of the Montana Resources Indemnity
Trust Act). Subsections (2) and (3) were passed to assure
the constitutional protection of this Trust and to preserve
the Trust for its intended purpose. They state:
(2) The legislature shall provide for a
fund, to be known as the resource
indemnity trust of the state of Montana,
to be funded by such taxes on the
extraction of natural resources as the
legislature may from time to time impose
for that purpose.
(3) The principal of the resource
indemnity trust shall forever remain
inviolate in an amount of one hundred
million dollars ($100,000,000),
guaranteed by the state against loss or
diversion.
We do not find a limitation in subsection (2) which
would restrict the use of Trust funds to reclamation of
lands. The subsection creates the Trust, titles the Trust
and pro~ridesa source of funding for the Trust. We note that
the Trust is not titled the Reclamation of Lands Indemnity
Trust nor the Mining Lands Indemnity Trust, but the Resource
Indemni-ty Trust. As words must be given their natural and
popular meaning in applying statutory construction, we note
that Websters 3rd New International Dictionary defines
resource as "a new or a reserve source of supply or support:
a fresh or additional stock or store available at need:
something in reserve or ready if needed." This definition is
very broad and indicates an intent on the part of the framers
of the provision to have the Trust indemnify the people of
the state for the taking or using of - resource.
any
Examining subsection ( 3 ) , we find a limitation upon the
use of the Trust in clear and unambiguous words. However,
this limitation merely protects the principal of the Trust
from future invasion by the Legislature. This provision may
not be construed as a limitation on the use of Trust income,
nor of the use of Trust principal over and above the
$100,000,000 protected by subsection (3).
Appellants claim that the inclusion of subsections ( 2 )
and ( 3 ) in sec. 2 shows an intent to use the Trust strictly
for the purpose of reclamation of lands disturbed by the
takinq of natural resources as provided in subsection (1).
They contend the use of the words "for that purpose" in
subsection (2) refers back to subsection (1) and the purpose
stated therein of reclamation of lands disturbed.
Respondents correctly point out that petitioners' argument
ignores a basic rule of grammatical construction: "[tlhe
ordinary rule of construction is that the exception is
confined to the last antecedent." (Emphasis added.) State
ex rel. Hinz v. Moody (1924), 71 Mont. 473, 484, 230 P . 575,
579. The last antecedent phrase in subsection (2) is the
funding of the Trust, not the reclamation of disturbed lands
found in subsection (1).
Further, the Constitution as a whole does not support a
finding of a Trust fund limitation in Art. IX, sec. 2 of the
1972 Montana Constitution. At no other place in the
Constitution is a limitation placed upon the appropriation of
the funds of this Trust. Where a limitation on certain,
specific revenues is intended in other sections in the
Constitution, that limitation is clearly spelled out. See,
e.g., Art. IX, sec. 5 (relating to the coal severance tax
trust fund) ; and Art. VIII, sec. 6 (relating to the
non-diversion of highway revenues).
For the foregoing reasons we hold the plain language of
Art. IX, sec. 2 does not place a limitation upon the
appropriation of resource indemnity trust funds beyond the
restriction contained in subsection (3). Having so
determined we may not apply other means of statutory
construction. Keller, 553 P.2d at 1006.
As Art. IX, sec. 2 of the 1972 Montana Constitution
does not restrict appropriation of Trust funds beyond the
limitation contained in subsection (3), we now turn to
petitioners' third and fourth issues.
Petitioners first argue that respondents, as trustees
of the Trust, have violated their fiduciarv duties as
trustees by allocating Trust funds for projects unrelated to
the reclamation of lands disturbed by the taking of natural
resources. We held that the plain language of the 1972
Montana Constitution does not so limit the appropriation or
allocation of Trust funds, and we need only discuss whether
the Montana Resource Indemnity Trust Act, Title 15, Chapter
38, contains such a limitation on the use of funds.
Our examination of the Act finds the appropriation or
allocation of Trust funds is not limited to the reclamation
of lands disturbed by the taking of natural resources.
Rather, the Legislature has provided the funds "shall be used
and expended to improve the total environment and rectifv
damage thereto." Section 15-38-203 (1), MCA. "Total
environment" has been defined as "air, water, soil, flora and
fauna and the social, economic, and cultural conditions that
influence communities and individual citizens." Section
15-38-103 (4), MCA. It is indisputable this purpose is very
broad and allows the Legislature great discretion in
determining the uses to which to apply Trust funds. The Act
onlv limits appropriations to programs or uses which improve
the total environment and rectify damage thereto, as total
environment is defined in S 15-38-103(4), MCA. We find no
express limitation contained within the Act which would limit
appropriation or allocation of Trust funds solely for
reclamation of lands disturbed by the taking of natural
resources.
Petitioners also contend past and present expenditures
have been made of Trust funds for general operating expenses
of state agencies in violation of the express limitations in
5 15-38-203(2), MCA, and in breach of their fiduciary duties
as trustees of the Trust. Section 15-38-203(2), MCA, states:
It is the intent of the legislature that
future appropriations from the resource
indemnity trust interest account not be
made to fund general operating expenses
of state agencies.
Initially we note that this subsection, added by the 1985
Legislature, specifically applies to "future appropriations."
For that reason we find there could not have been a breach of
fiduciary duty prior to the effective date of the statute.
Further, the Legislature generally cannot pass legislation
which a future Legislature may not repeal. State v. State
Highway Commission (1931), 89 Mont. 205, 215, 296 P. 1033,
1036.
Upon examination of the specific violations alleged by
petitioners, we find a problem of semantics. Petitioners
identify appropriations made to the Department of State
Lands, (DSL) the Department of Livestock, and the Department
of Natural Resources in the 1987 biennium, as having been
made for general operating expenses. We find it ironic that
one of the expenditures, alleged as having been for "general
operations," was for the reclamation division of the DSL in
1986. The funding for the reclamation division was provided
in total by Trust funds and federal funds allocated for
similar use. The division is responsible for regulating
mining related disturbances in the state and enforcing the
following acts: the Metal Mine Reclamation Act, the Open Cut
Mining Act, the Montana Strip and Underground Mine
Reclamation Act, and the Underground Mine Siting Act. The
activities conducted by the division are admittedly
administrative in nature, but are essential to ensuring that
the total environment of the state is improved and damage
thereto is rectified. The argument that Trust funds
allocated toward operation of these programs is in violation
of 5 15-38-203 (2), MCA, is without merit. In each case, the
State has shown the funds were expended for the operation of
programs related to improving the total environment or
rectifying damage thereto.
The allocation of Trust funds for these programs did
not constitute an expenditure for general operating expenses
of state agencies in violation of 5 15-38-203(2), MCA.
Consequently, we hold the use of funds for programs related
to improving the total environment does not violate
respondents' fiduciary duty toward the Trust in allocating
Trust funds. Having found petitioners are not entitled to
relief, petitioners ' claim for attorney's fees must be, and
hereby is denied.
We concur:
P
Justi e
/'
Justices
Mr. Justice John C. Sheehy, dissenting:
This decision continues what has become a commonplace in
the history of the state of Montana: the State gets the gold
mine, Butte gets the shaft.
The decision is about as farfetched a stretch of
interpretation of a constitutional provision as can be
imagined. The State Constitution requires that lands
disturbed by the taking of natural resources shall he
reclaimed. The Constitution further provides for a special
fund to be created based solelv on the extraction of natural
resources. Somehow, semantically, the majority find no nexus
between the two provisions, all contained in the same
constitutional article.
The close tailoring of the tax on the extraction of
natural resources to the constitutional mandate that all
lands disturbed by the taking of natural resources be
reclaimed is ignored. Somehow the obvious connection between
the tax and the purpose of the tax escapes the facile
interpretation of the majority.
In their response to the petition, the state of Montana
and its Treasurer admitted that the 1985 legislature
"utilized a portion of the interest income from the Resource
Indemnity Trust. fund to fund general operating expenses of
state agencies." (Paragraph 11, response to amended
petition.) Yet the majority see nothing inconsistent in
permitting the State to fund its general operating expenses
from a fund constitutionally entitled "Resource Indemnits
Trust. " A trust by any other name remains a trust, and a
breach of trust by the State should no more be countenanced
b ~ rthis Court than hy any prtvate trustee.
The Resource Indemnity Trust was never intended to fund
the general operations of the State. Other taxes levied upon
extractors of natural resources amply provide for the general
expenses of state government. The coal severance tax
(Section 15-35-103, MCA) is partly credited to the general
fund of the State. (Section 15-35-108 (3) (k), MCA.) The oil
and gas severance tax (Section 15-36-101, MCA) is allocated
to county expenses and then to the general fund. Section
15-36-112, MCA. The mining license taxes levied on
metalliferous mines (Section 15-37-103, MCA) goes partly to
the credit of the general fund of the State. Section
15-37-117, MCA. The taxes on micaceous mineral mines all go
to the general fund of the State. Section 15-37-207, MCA.
The Resource Indemnity Trust Tax, as a special tax levied for
land reclamation, cannot be justified if some of that tax is
going to be siphoned off for the general operations of the
State. To permit such extraneous use of the tax funds
violates the legislative purpose given as the excuse for
levying the tax. That legislative purpose follows:
It is the policy of the state of Montana to
indemnify its citizens for the loss of long term
value resulting from the depletion of its mineral.
resource base and for environmental damage caused
by mineral development. This policy of
indemnification is achieved by establishing a
permanent Resource Indemnity Trust Fund from the
proceeds of a tax levied on mineral extraction and
by allocating spendable trust revenues:
(1) To protect and restore the environment from
damages resulting from mineral development; and
(2) To support a variety of development programs
that benefit the economy of the State and the lives
of Montana citizens.
How blatant will t.he extraneous use of Resource
Indemni ty Trust taxes become? To begin with, 30 percent. of
the interest income of the Resource Indemnity Trust Fund must
now be allocated to the water development state special
revenue account. Section 15-38-202 (2)(a), MCA. Out of that
account, the taxes imposed on the extraction of natural
resources will be used for the rehabilitation of State owned
projects and parks, including the rehabilitation of spillways
and State owned dams; the formulation of down stream
emergency warning and evacuation plans for state-owned dams;
the development of hydropower potential of state-owned dams;
the promotion and development of off-stream or tributaries
storage; and among others, administrative expenses, including
but not limited to the salaries and expenses of personnel,
equipment, office space and other necessities incurred in the
administration of the water development program. Section
85-1-604 (3)(b), MCA.
The preservation and proper use of water is necessary to
the well-being of this dry western state, but the expense o f
such preservation should never be fohbed off on a tax levied
solely on mines and oil and gas operations, a tax ostensib1.v
levied for the purpose of land reclamation.
1 take the position that since land reclamation is
constitutionally demanded, and since the Constitution
provides a method through the Resource Indemnity Trust Fund
to pay for such reclamation, that monies raised from taxes on
parties who extract the natural resources should be limited
to the purposes of the tax. The legislature, by resorting to
special tax funds to provide for general fund obligations is
creating an unequal and unfair burden on these special
taxpayers and we should not countenance it.
T concur in the foregoing s
'
d
P nt of Justice Sheehy.