Mont. Supreme Court Again Rejects Crow Compact Challenges

By Lars-Eric Hedberg

Dec. 31 — The Montana Supreme Court has again affirmed the state water court's rejection of challenges to the Crow Water Compact.

Writing for a unanimous court, Chief Justice Mike McGrath concluded in a Dec. 30 opinion that the Montana Water Court applied the proper standard of review when it approved the compact, an agreement among the Crow Tribe, U.S. and state for the distribution and management water rights in south central Montana.

The compact establishes a 500,000 acre-feet per year natural flow water right from the Big Horn River Basin and directs the U.S. to conditionally grant another 300,000 acre-feet per year from Bighorn Lake, in May 2015.

The state supreme court also held that individual objectors, who are not parties to the compact, failed to show that the agreement was unreasonable and materially injured their interests. Moreover, the negotiation process did not violate their due process rights.

The parties to the compact reached an agreement in 1999 and the Montana Legislature ratified it later that year. After Congress ratified it in the Crow Tribe Water Rights Settlement Act of 2010, Pub. L. 111-291, § 404(a)(1), the tribe ratified it the following year.

The water court rejected compact objections and approved the agreement but must still enter a final decree incorporating the tribal water right.

Scott Green, an attorney at Patten, Peterman, Bekkedahl & Green, PLLC and counsel for the landowners who challenged the compact, told Bloomberg BNA Dec. 31 that his clients will file a petition for rehearing in the Montana Supreme Court because the opinion contains factual errors and misquotes a statute.

“The court wrote that the objectors own land and water rights near the Crow Reservation, when, in fact, they are non-Indians who live and own parcels in fee-simple on the reservation,” Green said. “Most of them hold priority water rights dating to 1868, when the reservation was created, and their rights are equal to the tribe's reserved water right.”

Green said his clients also would consider petitioning for U.S. Supreme Court review. It would be the second petition regarding a state supreme court decision affirming the water court's approval of the compact.

Compact Approval Affirmed 

The state supreme court first ruled that the water court correctly held that the objectors must show that their interests are “materially injured by operation of the” compact, rather than adopt the “good cause” standard they had sought. The good cause standard, according to the supreme court, relates to filing an initial objection to the compact, not declaring it unreasonable.

The state supreme court found that objectors did not meet their burden of showing the compact doesn't conform with Winters v. United States, 207 U.S. 564 (1908), doesn't violate their property rights and grants too much water to the tribe. They also failed to show the compact materially injures their interests with respect to fishery maintenance, closure of smaller basins and tribal entry onto private land with landowner approval, the court wrote.

Lastly, the court held the compact did not violate the objectors' due process rights because they had opportunities to be heard and comment.

Second Ruling Against Compact Objectors 

The state supreme court ruled July 29 that the water court doesn't have to separately quantify water claims of those who hold allotments of former Crow reservation land because they were represented by the U.S. during compact negotiations (In re Crow Water Compact, 354 P.3d 1217, 2015 BL 242553 (Mont. 2015)).

The allottees petitioned the U.S. Supreme Court Dec. 14 to hear argument on whether water rights owned by individual members of the tribe, separate from rights possessed by the tribe, can be awarded to the tribe in negotiations. They also asked whether state courts have jurisdiction to decide questions of federal law pertaining to the allottees' water rights (Crow Allottees v. United States, U.S., No. 15-779, 12/14/15).

Green said the compact is “horrible” for American Indians holding allotments and for people living on the reservation who are not American Indians.

Green and John C. Van Aatta of Patten, Peterman, Bekkedahl & Green, PLLC, Billings, represented the objectors.

Nathan A. Espeland of Espeland Law Office, PLLC, Columbus, Mont., and Merrill C. Godfrey of Akin Gump Strauss Hauer & Feld, LLP, Washington, represented the Crow Tribe.

Assistant Attorney General John C. Cruden and John L. Smeltzer of the Department of Justice, Washington, represented the U.S.

Montana Attorney General Timothy C. Fox and Assistant Attorney General Jeremiah D. Weiner, Helena, represented the state.

To contact the reporter on this story: Lars-Eric Hedberg in Washington at lhedberg@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com