On Appeal From the Montana Water Court, Cause No. WC-2o12-o6, Judge Russ McElyea, presiding

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1 January IN THE SUPREME COURT OF THE STATE OF MONTANA No. DA Case Number: DA IN THE MATTER OF THE ADJUDICATION OF THE EXISTING AND RESERVED WATER RIGHTS TO THE USE OF WATER, BOTH SURFACE AND UNDERGROUND, OF THE CROW TRIBE OF INDIANS OF THE STATE OF MONTANA On Appeal From the Montana Water Court, Cause No. WC-2o12-o6, Judge Russ McElyea, presiding APPELLANTS ALLOTTEES7OBJECTORS' OPENING BRIEF Hertha L. Lund Breeann M. Johnson Lund Law, PLLC 662 Ferguson Ave., Unit 2 Bozeman, MT Telephone: (406) Facsimile: (406) LundpLund-Law.corn Johnson@Lund-Law.com Elizabeth A. Brennan Brennan Law & Mediation, PLLC 516 W. Mountain View Drive Missoula, MT Telephone: (406) Facsimile: (877) Beth(a)BrennanLawandMediation.com A ttorneys for Petitioners Allottees David W. Harder U.S. Department of Justice th Street, Suite 370 Denver, CO John Chaffin U.S. Dept. of the Interior Office of the Solicitor th Avenue North, Suite 112 Billings, MT Attorneys for the United States Nathan A. Espeland, Esq. Espeland Law Office, PLLC PO Box 1470 Columbus, MT Attorney for Crow Tribe 1

2 Jeremiah D. Weiner, Esq. Assistant Attorney General 215 North Sanders P.O. Box Helena, MT Attorney for the State of Montana 2

3 ISSUES PRESENTED FOR REVIEW STATEMENT OF THE CASE STATEMENT OF THE FACTS STANDARD OF REVIEW TABLE OF CONTENTS SUMMARY OF ALLOTTEES' ARGUMENT ARGUMENT PAGE NO. I. THE MONTANA WATER COURT DID NOT APPLY THE PROPER STANDARD TO ALLOTTEES' FACTUAL ALLEGATIONS II. THE MONTANA WATER COURT LACKED JURISDICTION TO MAKE LEGAL DETERMINATIONS REGARDING ALLOTTEES' FEDERAL CLAIMS 31 III. THE MONTANA WATER COURT FAILED TO APPLY RELEVANT FEDERAL LAW TO ALLOTTEES' CLAIMS 36 IV. THE MONTANA WATER COURT SHOULD HAVE STAYED ITS PROCEEDINGS AND DECLINED TO ADDRESS SUBSTANTIVE ISSUES THAT EXCEED ITS JURISDICTION 39 CONCLUSION 44 3

4 TABLE OF CITATIONS MONTANA CASES Agri West, Inc. v. Koyama Farms, Inc., 281 Mont. 167, 933 P.2d 808 (1997) Fellows v. Office of Water Com'r ex rel Perry v. Beattie Decree Case No. 371, 2012 MT 169, 365 Mont. 540, 285 P 3d 448 PAGE NOS , Giese v. Blixrud, 2012 MT 17o, 365 Mont. 548, 285 P 3d In re Estate of Big Spring, 2011 MT 109, 36o Mont. 370, 255 P.3d , 32 In re Marriage of Limpy, 195 Mont. 314, 636 P.2d 266 (1981) 40 Karr v. Karr, 192 Mont. 388, 628 P.2d 267 (1981) 42 Matter of Sage Creek Drainage Area, 234 Mont. 243, 763 P.2d 648 (1988) Montana Trout Unlimited v. Beaverhead Water Co., 2011 MT 151, 361 Mont. 77, 255 P.3d 179 Nielsen v. Brocksmith Land & Livestock, Inc., 2004 MT 101, 321 Mont. 37, 88 P.3d , 3o 40 Spencer v. Beck, 2010 MT 256, 358 Mont. 295, 245 P 3d 21 23, 24 State ex rel Greely v. Confed. Salish & Kootenai Tribes, 219 Mont. 76, 712 P.2d 754 (1985) Western Security Bank v. Eide Bailly LLP, 2010 MT 291, 359 Mont. 34, 249 P 3d 25 33,

5 FEDERAL CASES PAGE Nos. Cherokee Nation v. Georgia, 3o U.S. (5 Pet.) 1, 17 (1831) 11 Christensen v. United States, 755 F.2d 705 (9th Cir. 1985) 24, 32 Colville Confederated Tribes v. Walton, 647 F.2d 42 (9th Cir. 1981) (Walton II) 34, 37 Colo. River Water Conserv. Dist. v. U.S., 424 U.S. 800 (1976) 33 England v. Louisiana State Bd. Of Med. Examiners, 375 U.S. 411 (1964) 39, 4o Hendler v. U.S., 952 F.2d 1364, (Fed. Cir. 1991) 21 Landis v. N. Am. Co., 299 U.S. 248 (1936) 43 Loring v. United States, 6io F.2d 649 (9 th Cir. 1979) 24, 32 Pinkham v. Lewiston Orchards Irr. Dist., 862 F.2d 184 (1988) 24, 32 Seminole Nation v. United States, 316 U.S. 286 (1946) 19 United States v. Mottaz, 476 U.S. 384 (1986) 24, 32 United States v. Powers, 94 F.2d 783 (1938), affd, 305 U.S. 527 (1939) 18, 25, 34, 37 United States v. Preston, 352 F.2d 352 (9th Cir. 1965) 25 CASES FROM OTHER JURISDICTIONS United States v. Washington, 375 F.Supp. 2d 1050 (W.D. Wash 2005) PAGE Nos. 37 MONTANA STATUTES PAGE Nos. Mont. Code Ann (2) 24, 31, 35 Mont. Code Ann , 42 5

6 Mont. Code Ann (3) 8 FEDERAL STATUTES PAGE NOS. 25 U.S.C (1887 General Allotment Act) io 25 U.S.C U.S.C. 666 (The McCarran Amendment) 33 Crow Allotment Act of 1920, 41 Stat. 751 (June 4, 1920) 11 Crow Tribe Water Rights Settlement Act of 2010, Pub. L (Dec. 8, 2010) 15, 16, 20, 21 SCHOLARLY OR OTHER RESOURCES Armen H. Merjian, An Unbroken Chain of Injustice: The Dawes Act, Native American Trusts, and Cobell v. Slazar, 46 Gonz. L. Rev. 609 (2011) Brett J. Stavin, Responsible Remedies: Suggestions for Indian Tribes in Trust Relationship Cases, 44 Ariz. St. L.J (2012) James Stuart Olson and Raymond Wilson, Native Americans in the Twentieth Century 24 (Univ. of Illinois Press 1986) Montana Dept. of Nat. Resources and Conservation Adjudication Status Report rts/ adjudication/ adistatus report.pdf (last accessed Jan. 20, 2015) PAGE NOS. 11,

7 ISSUES PRESENTED FOR REVIEW 1. Whether the Montana Water Court applied the proper standard of review in granting the United States' and Crow Tribe's motions to dismiss Allottees' objections. 2. Whether the Montana Water Court exceeded its jurisdiction in dismissing Allottees' objections rather than staying its proceedings pending review of Allottees' substantive claims by the U.S. District Court for the District of Montana. 3. Whether the Montana Water Court erred in concluding that: a. Allottees' rights to water are not distinct rights appurtenant to each Allottees' individual Indian allotted lands; b. The United States as trustee adequately represented the Allottees' interests throughout the Compact negotiations; c. A current use list is not a necessary prerequisite for approving the Crow Compact; d. Allottees' objections are without merit and are therefore dismissed, and their request for a stay is moot. 7

8 STATEMENT OF THE CASE Appellants Crow Allottees ("Allottees") ask the Court to reverse the Montana Water Court's dismissal of Allottees' objections to the preliminary decree approving the Crow Water Compact ("Crow Compact" or "Compact") and stay the Water Court proceedings pending resolution of the Allottees' claims in federal court. This interlocutory appeal raises questions of law, not fact. Mont. Code Ann (3). Allottees are affected by the Water Court's decision dismissing their objections, and participated in the matter in which the ruling was issued. Id. Allottees filed a complaint in U.S. District Court for the District of Montana on May 15, 2014, alleging violations of their constitutional and statutory rights and citing their formal objections to the Crow Water Compact. Crow Allottees Assoc. v. U.S. Bureau of Indian Affairs, CV LG-SPW-CSO (May 15, 2014), attached as Exhibit A. Allottees filed individual objections in the Montana Water Court between March and June See, e.g., Objections of Sharon Peregoy, WC (June 20, 2013), attached as Exhibit B. On the same day their federal complaint was filed, Allottees moved to stay the Montana Water Court proceedings, in which a preliminary decree approving the Crow Compact was issued on Jan. 28, See Notice of 8

9 Appearance and Motion to Stay, WC (May 15, 2014); see also Montana Dept. of Nat. Resources and Conservation Adjudication Status Report, its/adjudication/ adjstatus report.pdf (last accessed Jan. 20, 2015). The Crow Tribe moved to dismiss Allottees' Objections on May 23, 2014, and the United States moved to dismiss on June 2, Both parties also resisted Allottees' motion to stay. After full briefing, and without oral argument, the Water Court dismissed Allottees' objections and denied their motion to stay as moot. See Or. Dismissing Allottee Objs. and Denying Request to Stay, WC (July 3o, 2014), attached as Exhibit C. Allottees filed a Notice of Appeal herein on August 29, The United States and the Crow Tribe moved the Water Court for approval of the Crow Compact on October 16, The Water Court filed an Amended Scheduling Order on October 29, 2014, setting trial for February 2-6, See Or. Granting Extension and Amend. Sched. Or., WC (Oct. 29, 2014). The Amended Scheduling Order extended the time to respond to the motion for approval to November 21, 2014, and rescheduled a hearing on all pretrial motions from December 10, 2014 to December 19, Id. 9

10 In response to the Amended Scheduling Order, Allottees moved the Water Court for a stay pending appeal, pursuant to Rule 22 of the Montana Rules of Appellate Procedure. See Allottees' Mot. for Stay Pending App. and Br. in Support, WC (filed Nov. 12, 2014). The Water Court denied the motion on December 2, See Or. Denying Mot. to Stay (filed herein Dec. 4, 2014). The Allottees petitioned this Court for a writ of supervisory control on December 1, 2014, and moved to dismiss their appeal without prejudice on December 3, On December 24, 2014, the Court denied the Allottees' petition as well as their motion to dismiss their appeal, and ordered them to file an opening brief within 3o days. STATEMENT OF THE FACTS The Crow Tribe is a federally recognized American Indian tribe on the Crow Indian Reservation in southeastern Montana. In 1891, via an act of Congress, the Crow Tribe ceded two million acres of land to the federal government. Crow tribal members were permitted to hold trust allotments on the ceded portion for allotments issued pursuant to the 1887 Dawes Severalty Act, also known as the 1887 General Allotment Act or the Dawes Act. 24 Stat. 388, codified at 25 U.S.C Allotment was "designed to force Native Americans to leave their communal lands and to assimilate 10

11 into the rest of America while opening their remaining territory to non- Native ownership and use." Armen H. Merjian, An Unbroken Chain of Injustice: The Dawes Act, Native American Trusts, and Cobell v. Salazar, 46 Gonz. L. Rev. 609, 616 (2011). Many Indians were unprepared for individual land ownership, accustomed as they were to a nomadic, communal way of life. Id. The 1920 Crow Allotment Act further allocated portions of the Crow Reservation to enrolled members of the Crow Tribe, with legal title held in trust by the United States. 41 Stat. 751 (June 4, 192o). Tribal members were issued trust patents unless they elected in writing to have them patented in fee. Id. The relationship between the federal government and Indian tribes has long been considered a trustee relationship. Cherokee Nation v. Georgia, 30 U.S. (5 Pet.) 1, 17 (1831)(describing Indians as "domestic dependent nations"). According to one scholar, "[t]he word 'dependent' was not meant to be pejorative. It meant, vis-a-vis the treaties that the United States had entered into with the tribes, the tribes were owed protection." Brett J. Stavin, Responsible Remedies: Suggestions for Indian Tribes in Trust Relationship Cases, 44 Ariz. St. L.J. 1743, 1747 (2012)(citations omitted). 11

12 In addition to its trust responsibility to Indian tribes, the United States also stands in a fiduciary role as the holder of title in trust for the benefit of individual allottees, and purported to represent the Allottees' interests throughout the Crow Compact negotiations. Theodore Roosevelt declared allotment "a mighty pulverizing machine to break up the tribal mass." Merjian, An Unbroken Chain of Injustice, 46 Gonz. L. Rev. at 618 (quoting Theodore Roosevelt, President of the United States, First Annual Message to Congress (Dec. 3, i9o1), available at It succeeded: Between 1887 and 1934, when the Dawes Act was repealed, more than 90 million acres of land previously owned by Native American tribes became individually owned by non-natives. James Stuart Olson and Raymond Wilson, Native Americans in the Twentieth Century 24 (Univ. of Illinois Press 1986). The purpose of Indian allotment to undermine tribal ownership and cultivate individual ownership in Native Americans has been called "an unmitigated disaster for Native Americans, an example of ethnic cleansing in the literal sense: the idea was to 'cleanse' the Native Americans of their ethnic identity and to force them to become independent farmers, part of 'mainstream' America." Merjian, An Unbroken Chain of Injustice, 12

13 46 Gonz. L. Rev. at 616. This is the painful and unjust irony of Allottees' claims: Having been stripped of their communal lands ioo years ago and forced onto allotments, they now assert their legal rights as individual owners of real property to their appurtenant water rights. In response, they are told that all water within the boundaries of the Crow Reservation is owned communally, by the Crow Tribe, and that they have no legally recognizable rights to the water they use and need. The priority date of Indian Winters Doctrine reserved water rights appurtenant to allotments on the Crow Reservation is based upon the Fort Laramie Treaties. The Crow Compact preserves the latter Fort Laramie Treaty date of 1868 for the Tribe, but creates different, often very junior, priority dates for Allottees. (In their federal complaint, the Allottees have alleged that the earlier Fort Laramie Treaty date of 1851 is the proper priority date for all of the Winters Doctrine reserved water rights on the Crow Reservation). For example, Allottees who used water outside of the Crow Irrigation Project can be made junior to pre-1999 water rights recognized under Montana law and to the pre-1999 uses of the Crow Tribe's water right, regardless as to when their rights were originally developed. The Crow Tribe does not have a tribal code or system for 13

14 administering or regulating the use and allocation of water on the Crow Reservation. The Crow Compact requires the Tribe to develop and adopt a tribal water code within two years of the enforceability date of the Crow Compact, but does not require specific protection of individual Allottees' water rights. The Crow Tribal government, the United States, and the State of Montana began quantifying Indian reserved water rights on the Crow Reservation in Negotiations proceeded in fits and starts beginning in the mid-198os, with the Compact enacted into Montana law in Congress ratified the Compact in 2010, and the Crow Tribe approved the Compact through referendum in The Montana Water Court issued the preliminary decree for the Compact in The Allottees have repeatedly attempted to participate in this nearly forty-year process. Their attempts have been continually rebuffed. The United States, as trustee, has barely communicated with the Allottees, let alone obtained their consent to the Compact. Fundamental to the Allottees' claims are their legal rights to water distinct from the Tribe's rights. The United States refuses to even acknowledge those rights, let alone take steps to protect them. Moreover, the United States refuses to acknowledge the irreconcilable conflict it faces 14

15 in its role as trustee for both the Tribe and the Allottees. As the Allottees' fiduciary in negotiating the Compact, and in light of its obvious conflict as trustee for two parties with conflicting claims, the United States had a duty to provide the Allottees with separate legal representation in negotiating and implementing the Compact. It has refused to do so. The Compact grants water rights to the Tribe without allocating any water rights to the Allottees. Instead, the Compact directs the Tribe to ensure Allottees are given "just and equitable" distributions of water -- which does not guarantee one molecule of water for household, crop, or livestock use. See Crow Tribe Water Rights Settlement Act of 2010, Pub. L (Dec. 8, 2010) ("Settlement Act") at 407(D), attached as Exhibit D. More egregiously, on April 27, 2012, the Secretary of the Interior, acting as trustee for the Allottees, executed a waiver and release of all Allottees' claims for Indian Winters doctrine reserved water rights appurtenant to all trust allotments. This waiver will become effective on the enforceability date of the Crow Compact. As of that date, the United States will waive all claims for water rights within the Crow Reservation and the ceded strip that the United States, acting as trustee for the Allottees, asserted or could have asserted in any proceeding, including the State of 15

16 Montana stream adjudication, prior to and including the enforceability date, except to the extent that such rights are recognized in the Crow Compact and the Settlement Act. The Allottees have alleged in their federal court complaint, as well as in their objections to the Montana Water Court, that the United States never consulted with the Allottees about these waivers, never obtained the Allottees' consent to these waivers, failed to provide the Allottees with adequate legal representation in the negotiations, failed to protect the Allottees' rights under the Compact, and violated the United States' fiduciary responsibility to the Allottees via its actions. None of this is new information to the United States. The Allottees have been seeking information and representation for several years. On November 16, 2009, the Crow Allottees Association sent a letter to the Assistant Interior Secretary for Indian Affairs, Larry Echo Hawk, stating: As you are no doubt aware, the Crow Tribal allottees of land on the Crow Reservation have a well established legal water right that is distinguishable and mutually exclusive to that of the Tribal water right.... CAA allottees have an individual right to be represented in the negotiation of a water settlement agreement which seeks to include Crow Tribal member allottees. CAA and its members do not wish to be represented by the Tribal Administration in connection with water quantification, allocation, and the negotiation of allottees water rights. (Emphasis in original). Most CAA members are in forma pauperis. CAA requests that the Secretary of Interior provide CAA with adequate funds for CAA and or 16

17 its individual members to employ a water rights lawyer of their choice, because the BIA has a conflict of interest in representing the federal government's water rights while simultaneously living up to its fiduciary responsibilities to Crow Tribal members claiming water rights. See Letter from Crow Allottees Association to Larry Echohawk, Assistant Secretary of the Interior, Bureau of Indian Affairs (Nov. 16, 2009), attached as Exhibit E. responded: In response, Alletta Belin, Counselor to the Deputy Secretary, Your letter raises a number of difficult questions. At the outset, it is important to explain that the Department is aware of the unique right of allottees and how those rights might be impacted by the Compact entered into by the Crow Tribe and the State of Montana pending legislation before Congress to approve and ratify the Compact. The Department intends to continue working with Congress and the Tribe to ensure that allottee interests are appropriately addressed in any legislation approving the Compact. The role to be played by individual allottees or allottee associations in settlement negotiations is complicated. I have been informed that there are thousands of allottees holding interests in trust lands on the Crow Reservation. Obviously, negotiating with this many people is a practical impossibility. See Letter from Alletta Belin, Counselor to the Deputy Secretary, to the Crow Allottees Association (Feb. 5, 2010), attached as Exhibit F. Allottees recognize the "difficult questions" raised by their "unique right" to water. Their rights are, as acknowledged by Ms. Belin, "complicated" but not impossibly so. Almost 8o years ago, the United 17

18 States Supreme Court upheld rulings by the Ninth Circuit and Montana U.S. District Court, which provided that a portion of the Tribe's Winters reserved water rights passed to individual Indian allotments as an appurtenance. United States v. Powers, 305 U.S. 527, (1939). The United States Supreme Court noted, specifically that the Crow Treaty "contemplated ultimate settlement by individual Indians upon designated tracts...with exclusive right of cultivation...and with expectation of ultimate complete ownership. Without water productive cultivation has always been impossible." Id. at 533. The Court stated that it could find no Congressional intent to "permit allottees to be denied participation in the use of waters essential to farming and home making;" and, that "The patented lands had no value for agriculture without water." Id. The Allottees assert that they have legal rights to water distinct from the Tribe's rights. The United States and the Tribe disagree. But the important point is that as the Allottees' fiduciary, the United States had a meaningful responsibility to do more than simply waive Allottees' rights and overrule their concerns. It had a duty to provide the Allottees with separate legal representation and consider impacts to their rights in negotiating and implementing the Compact. It certainly did not have a duty to waive Allottees' rights to seek a judicial remedy for the United States' 18

19 failure to follow the law. At the very least, in light of their material disagreement with Allottees' asserted rights and the Allottees' claims seeking judicial review of those rights in federal court, the United States had a responsibility to agree to a stay of the Water Court proceedings and allow Allottees the opportunity to have their claims heard and determined by a federal court. Instead, it has consistently opposed Allottees at every turn. The United States' actions prove the Allottees' claims that their trustee did not take their rights seriously, did not consider how those rights could be affected by the Compact, and did not take any steps to protect the Allottees' rights under the Compact. The federal government's actions as trustee for the Indians should "be judged by the most exacting standards." Seminole Nation v. United States, 316 U.S. 286, (1942). By such standards, the United States' acts and omissions are undoubtedly wrong. Based on the waiver signed by the United States as trustee for the Allottees, the Water Court's approval of the Compact is a triggering mechanism that will extinguish Allottees' rights: (2) WAIVER AND RELEASE OF CLAIMS BY THE UNITED STATES ACTING ITS CAPACITY AS TRUSTEE FOR ALLOTTEES the United States, acting as trustee for allottees, is authorized and directed to execute a waiver and release of all claims for water rights within the Reservation... that the United States, acting as trustee for the allottees, 19

20 asserted, or could have asserted, in any proceeding, including the State of Montana stream adjudication, prior to and including the enforceability date, except to the extent that such rights are recognized in the Compact or this title. See Exhibit D, Settlement Act at sec. 410 (a)(2). which is: These waivers of Allottees' rights occur on the "enforceability date," (1) IN GENERAL The enforceability date shall be the date on which the Secretary publishes in the Federal Register a statement of findings that (A)(i) the Montana Water Court has issued a final judgment and decree approving the Compact; or (ii) if the Montana Water Court is found to lack jurisdiction, the district court of jurisdiction has approve the Compact as a consent decree and such approval is final. Id. at sec. 410(e), see Exhibit D. "Final judgment" for enforceability purposes means: (A) completion of any direct appeal to the Montana Supreme Court of a decree by the Montana Water Court...; or (B) completion of any appeal to the appropriate United State Court of Appeals, including the expiration of time in which a petition for certiorari may be filed in the United States Supreme Court, denial of such petition, or issuance of a final judgment of the United States Supreme Court, whichever occurs last. Id. at sec. 403(6), see Exhibit D. The Allottees seek to prevent the Water Court from approving the Crow Compact so as to avoid the extinguishment of their water rights as well as their right to bring their claims against their trustee for violation of 20

21 its fiduciary obligations to them. The Allottees' Winters Doctrine water rights are real property rights, subject to the protections afforded by the Fifth Amendment to the United States Constitution. Fundamental fairness and due process require that the Allottees not be placed at an unfair disadvantage related to their Winters Doctrine water rights: In the bundle of rights we call property, one of the most valued is the right to sole and exclusive possession the right to exclude strangers, or for that matter friends, but especially the Government.... The intruder who enters clothed in the robes of authority in broad daylight commits no less an invasion of these rights than if he sneaks in the night wearing a burglar's mask. Hendler v. U.S., 952 F.2d 1364, (Fed. Cir. 1991) (citations omitted). The Allottees are asking the federal court, among other things, to determine the very issues upon which the Water Court premised its dismissal of Allottees' objections: whether the United States failed to protect Allottees' Winters reserved water rights; whether the United States violated its fiduciary duties to Allottees; and whether the United States violated Allottees' due process rights. If the Montana Water Court approves the Crow Compact, and the federal court later rules in Allottees' favor, it is not clear how or whether the Allottees can protect their rights due to the waivers in the Settlement Act. 21

22 Appellees have argued that even if the Water Court moves forward in conflict with federal law, the Allottees can appeal to this Court. However, this outcome does not provide adequate relief for two reasons. First, if the Water Court is allowed to proceed, Allottees will not be able to participate in those hearings and at trial because they have been dismissed from the case. See Exhibit C, Or. Dismissing (July 30, 2014). The second reason this Court cannot provide an adequate remedy for Allottees is if the final decree is entered, no Montana state court has jurisdiction to decide the issues that Allottees have raised in their federal complaint. Allottees have raised their claims in the only court with jurisdiction to resolve them the federal court. Once the Water Court enters its final decree approving the Crow Compact, and if the decree is upheld on appeal, Montana will recognize all Indian trust water rights within the Crow Reservation as belonging exclusively to the Crow Tribe. It will not recognize any water rights as belonging to individual Allottees. Allottees will have no remedy because the United States, acting as Allottees' trustee without Allottees' approval, waived all of Allottees' claims against the state, the Tribe, and itself for any claims related to the Compact. For this reason, Allottees asked the Water Court and now ask this 22

23 Court -- to stay the Water Court proceedings pending federal review of their complaint. The Crow Compact negotiations started 3o years ago. Surely the process can wait one more year so that the unique rights of the Crow Allottees can be determined by a court of competent jurisdiction. STANDARD OF REVIEW This Court reviews de novo the dismissal of a claim under Rule 12 of the Montana Rules of Civil Procedure. Spencer v. Beck, 2010 MT 256, 7, 358 Mont. 295, 245 P.3d 21. Although Allottees' Objections were not styled as Complaints, they were the pleadings through which they appeared in the Water Court and gave notice of their claims. More importantly, both the Tribe and the United States explicitly moved to dismiss pursuant to M.R. Civ. P. 12. See The Apsaalooke (Crow) Tribe's Motion for Dismissal of Allottee Objections and Response to Motion to Stay at 1, WC (May 23, 2014) ("The Crow Tribe respectfully submits this Motion for Dismissal of Allottee Objections pursuant to Rule 12 of the Montana Rules of Civil Procedure"); The United States of America's Motion to Dismiss All Objections Filed by Individual Indian Allottees at 5, WC (June 2, 2014) ("the objections filed by the Allottees must be dismissed under Mont. R. Civ. P 12(b)"). 23

24 "A lower court should not dismiss a complaint for failure to state a claim 'unless it appears beyond doubt that the plaintiff can prove no set of facts' in support of the claim that would entitle the plaintiff to relief." Western Security Bank v. Eide Bailly LLP, 2010 MT 291, 359 Mont. 34, 249 P 3d 35 (citing Cowan v. Cowan, 2004 MT 97, 1110, 321 Mont. 13, 89 P.3d 6). In considering a motion to dismiss, two principles guide both the district court and this Court's determinations: (i) The complaint is to be construed in the light most favorable to the plaintiff, and (2) all factual allegations in the complaint are to be taken as true. Spencer, 10. SUMMARY OF ALLOTTEES' ARGUMENT The Montana Water Court is a court of limited jurisdiction, empowered solely to adjudicate claims of existing water rights. Mont. Code Ann (2). The Water Court has no jurisdiction to make any legal determinations of Indian law or constitutional law. Indian law is exclusively within the jurisdiction of the federal courts or the tribal courts. In re Estate of Big Spring, 2011 MT 109, 26, 36o Mont. 370, 255 P.3d 121 (citing U.S. Const., art. VI, el. 2); 25 U.S.C. 345; U.S. v. Mottaz, 476 U.S. 834 (1986); Pinkham v. Lewiston Orchards Irr. Dist., 862 F.2d 184 (1988); Christensen v. U.S., 755 F.2d 705 (9th Cir. 1985); Loring v. U.S., Ello F.2d 6 49 (9th Cir. 1979). 24

25 Allottees premised their objections to the Water Court's preliminary decree on a variety of factual and legal allegations. See Exhibit B, Objs. of Sharon Peregoy. Allottees' factual allegations are to be taken as true on a motion to dismiss -- but were not -- while their legal allegations raise questions of federal constitutional and Indian law that cannot be determined by the Montana Water Court, and must be made by the federal courts. The Water Court erred in failing to construe the Allottees' factual allegations in a light most favorable to them, and in making substantive legal holdings on issues beyond its jurisdiction. It ignored Allottees' claim that the United States failed to represent their interests in the Compact negotiations, and assumed, without analysis, that any legal representation equates to adequate legal representation. It applied the law relevant to compact approval, not to motions to dismiss. It utterly failed to acknowledge the complex legal claims raised by Allottees, or the fact that the federal courts have ruled that allottees own their reserved water rights, not the Crow Tribe. Powers, 94 F.2d at ; see also U.S. v. Preston, 352 F.2d 352, (1965). In other words, the Water Court ventured into territory far beyond its jurisdiction and did so without adhering to the proper standard of review or 25

26 the substantive law of a fiduciary's obligations, adequacy of representation, or the unique property rights of an Indian allottee. Its dismissal of Allottees' objections should be reversed on these grounds. Even if the Water Court had jurisdiction to decide some or all of Allottees' objections, it failed to apply the proper law and therefore reached erroneous conclusions. The Water Court should be directed to stay its proceedings until the federal court can decide whether Allottees' legal rights are in fact deserving of specific protection in the Crow Compact. Proceeding without such a determination flies in the face of judicial economy and basic fairness. All parties to the Compact are acting as though the Crow Compact is too big to fail. It is not. It is a complicated settlement agreement that must take into account many competing interests and needs, but failed to take into account the interests and needs of thousands of Crow Allottees. The Allottees' federal complaint is their last opportunity to determine and protect their rights. Surely the Water Court proceeding can be slowed enough to accommodate the Allottees' reasonable request to wait. Surely all of the parties can wait for a proper determination of the substantive nature of Allottees' interests before forging ahead with the Crow Compact and forever extinguishing Allottees' property rights. 26

27 ARGUMENT I. THE MONTANA WATER COURT DID NOT APPLY THE PROPER STANDARD TO ALLOTTEES' FACTUAL ALLEGATIONS. The Crow Tribe and the United States each moved to dismiss the Allottees' objections in the Water Court pursuant to Rule 12(b) of the Montana Rules of Civil Procedure, which "are a part of the rules governing the practice in the Water Courts." Matter of Sage Creek Drainage Area, 234 Mont. 243, 250, 763 P.2d 644, 648 (1988). Motions to dismiss are rare in the Water Court. In the only case in this Court involving the Water Court's dismissal of objections, the dismissal was premised on objectors' lack of standing. See, e.g., Montana Trout Unlimited v. Beaverhead Water Co., MT 151, II 3, 361 Mont. 77, 255 P.3d 179. However, in that case the Water Court converted the motion to dismiss to a motion for summary judgment so that it could rely on facts alleged in the parties' briefs. Id. Here, the Water Court erred by failing to accept as true the facts alleged in Allottees' objections, or by at least requiring the parties to submit stipulated facts on which the Water Court could issue a summary judgment ruling. Instead, the Water Court applied the law governing the approval of compacts and ignored Allottees' statements of fact supporting their objections. In so doing, the Court committed reversible error. 27

28 The Water Court's standard for reviewing a motion to dismiss is the same as for any other state court. "Dismissal for failure to state a claim is proper only if the district court finds that the plaintiff, accepting the truth of the allegations of the complaint, is not entitled to relief under any set of facts that could be proven in support of the claims." Giese v. Blixrud, 2012 MT 170, 14, 365 Mont. 548, 285 P 3d 458 (emphasis added). The Water Court committed reversible error by failing to apply this standard in adjudicating the Tribes' and the United States' motions to dismiss. The Allottees filed individual objections to the preliminary decree at various times between March 2013 and June Counsel Hertha Lund appeared on behalf of 49 Allottees (the Tribe refers to them as "Lund Allottees"), and referenced Allottee Sharon S. Peregoy's objections as "representative of the objections that other Allottee Objectors have to this adjudication." See Notice of Appearance and Mot. to Stay, WC , at 6 (filed May 15, 2014). The Water Court summarized Allottees' allegations in its order. See Exhibit C, Or. Dismissing (July 30, 2014) at 2. Allottees' objections included the following factual allegations, which should have been taken as true for the purposes of a Rule 12(b) motion to dismiss: 28

29 Allottees were not given any notice by the state of Montana, the United States, or the Crow Nation of the Crow Compact or the preliminary decree of the Crow Compact; Allottees were not given any technical or legal assistance by the Allottees' trustee, the United States, to understand their legal rights in relation to the Compact; Allottees were never given a copy to review or were never asked to participate in creating a list of all current uses of the reserved Indian water right, including uses by Crow Nation members; The Compact will make each of the Crow allottees the most junior water rights holders in the basin by assigning them a 1999 priority date, as opposed to the senior priority date of either 1868 or See Exhibit C, Or. Dismissing (July 30, 2014) at 2; and see Exhibit B, Objs. of Sharon Peregoy, at 2, 5. The Water Court summarized the Allottees' objection to inadequate representation as being that they "did not receive adequate technical or legal assistance." See Exhibit C, Or. Dismissing (July 30, 2014) at 3. However, Peregoy's objection states, "I have not been given any technical or legal assistance by my trustee, the United States, to understand my legal 29

30 rights." See Exhibit B, Objs. of Sharon Peregoy at 1 (emphasis added). Peregoy specifically stated: The only time former [Department of the Interior] Assistant Secretary [of Indian Affairs] Echohawk came to the Crow Reservation to discuss this matter, he told us we would be crazy not to ratify 'the best deal we were ever going to see.' We were not allowed to ask questions. See Exhibit B, Objs. of Sharon Peregoy at 5. Each of these factual allegations supports the Allottees' contentions that they were not adequately represented by their trustee during the Compact negotiations, resulting in the loss of their property and violation of their right to due process of law. Until, and unless, a court of competent jurisdiction makes findings on these disputed issues of fact based on properly presented evidence, any legal conclusions premised on these facts must construe the facts in Allottees' favor. The Water Court ignored this fundamental rule of civil procedure and accepted the opposing three governments' (the State of Montana, the United States, and the Crow Tribe) version of the facts unquestioningly. This error led the Water Court to make legal conclusions it had neither the factual basis nor the legal authority to make. Even if the three governments' motions to dismiss are best construed as motions to dismiss on the basis of standing, Trout Unlimited shows that 30

31 the standard of review does not change. If the Water Court wished to rely on facts other than those alleged in the Allottees' Objections, it could have converted the governments' motions to summary judgment motions and required the parties to submit statements of undisputed facts. Failing to do that, it was required to abide by the most basic rule governing motions to dismiss and construe all facts in the Allottees' favor. II. THE MONTANA WATER COURT LACKED JURISDICTION TO MAKE LEGAL DETERMINATIONS REGARDING ALLOTTEES' FEDERAL CLAIMS. The Chief Water Judge, commonly known as the Water Court, is a position created by statute. Mont. Code Ann (2). "The chief water judge and the associate water judge have jurisdiction over cases certified to the district court under and all matters relating to the determination of existing water rights within the boundaries of the state of Montana." Id. (emphasis added). "Under current Montana law the jurisdiction to determine existing water rights rests exclusively with the Water Court." Fellows v. Office of Water Com'r ex rel. Perry v. Beattie Decree Case No. 371, 2012 MT 169, 11 15, 365 Mont. 540,285 P 3d 448. The corollary of this rule is that the Montana Water Court lacks jurisdiction to determine anything other than existing water rights. 31

32 Additionally, issues of Indian law are within the exclusive jurisdiction of the federal courts or tribal courts. "Through the Supremacy Clause of the United States Constitution, federal preemption of state law in Indian affairs has continued as the principal doctrine underlying Indian law." In re Estate of Big Spring, 2011 MT 109, 26, 36o Mont. 370, 255 P.3d 121 (citing U.S. Const., art. VI, cl. 2). "Adherence to these principles has resulted in federal treaties, executive orders, and statutes preempting state law in areas that would otherwise be covered by a state's residual jurisdiction over persons and property within the state's borders." Id. (citing Cohen's Handbook of Federal Indian Law 2.01, 6.01[2]). "The [federal] district courts shall have original jurisdiction of any civil action involving the right of any person, in whole or in part of Indian blood or descent, to any allotment of land." 28 U.S.C The federal courts also have exclusive jurisdiction of disputes involving Indian allotments, including suits involving title, ownership, or other rights appurtenant to title in allotted land. U.S. v. Mottaz, 476 U.S. 834 (1986); Pinkham v. Lewiston Orchards Irr. Dist., 862 F.2d 184 (1988); Christensen v. U.S., 755 F.2d 705 (9th Cir. 1985); Loring v. U.S., 6io F.2d 649 (9th Cir. 1979). The McCarran Amendment waives the sovereign immunity of the 32

33 United States in state adjudications of reserved water rights, including Indian reserved water rights. 43 U.S.C. 666; Colorado River Water Conserv. Dist. v. U.S., 424 U.S. 800, 811 (1976). While the McCarran Amendment vests the Water Court with jurisdiction to adjudicate federal water rights reserved to the Crow Indians, it does not bestow it with jurisdiction to decide issues of federal Indian or constitutional law. The Greely case also does not expand the jurisdictional limitations of the Montana Water Court. State ex rel. Greely v. Confed. Salish & Kootenai Tribes, 219 Mont. 76, 712 P.2d 754 (1985). This Court held in Greely that only the Montana Water Court was required to follow federal law on Indian reserved water rights in quantifying existing water rights. Id. at 94-95, 712 P.2d at It reached that conclusion, in part, because of the parties' right to appeal not only to this Court but to the U.S. Supreme Court. Id. at 95-96, 712 P.2d at 766 ("Should the Water Court abridge Indian reserved water rights by improperly applying the Act and the federal law that protects those rights, that failure can be appealed to this Court as well as to the Supreme Court of the United States for 'a particularized and exacting scrutiny"). But the Montana Water Court cannot decide Indian law issues of first impression; it can only apply existing federal law. Greely, 219 Mont. at 95-33

34 96, 712 P.2d at 766. Whether Allottees' rights to a portion of the Crow Indians' reserved water rights are independent of the Tribe's right or derivative of the Tribe's right is a federal question, governed by Powers and Walton II. United States v. Powers, 94 F.2d 783, (9th Cir. 1938), affd, 305 U.S. 527 (1939); Colville Confederated Tribes v. Walton, 647 F.2d 42, 49 (9th Cir. 1981) (Walton II). The Water Court applied Powers incorrectly and mentioned Walton II for the sole, irrelevant premise that reserved water rights used for non-agricultural purposes do not pass to allottees. See Exhibit C, Or. Dismissing (July 3o, 2014) at 7. In other words, even if the Water Court had jurisdiction to decide federal questions, it applied federal law incorrectly. Fundamental to Allottees' objections are specific legal claims that: (1) Allottees have a legal right to water that is distinct from the Crow Tribe's reserved right; (2) The Crow Compact will harm the Allottees' legal and property rights, and (3) The United States' representation as trustee of the Allottees during the Compact negotiations was inadequate. These are not claims that the Water Court can resolve. Only a federal court with jurisdiction over federal questions can properly decide the legal 34

35 issues underlying Allottees' objections, which is why Allottees filed their federal court complaint and simultaneously moved to stay the Water Court proceedings pending the federal court's decision. The Water Court has jurisdiction to approve the Crow Compact insofar as its approval is based upon its findings as to "existing water rights within the state boundaries." Mont. Code Ann (2). The United States and the Crow Tribe opposed Allottees' motion to stay and moved to dismiss Allottees' objections on the grounds that Allottees' claims are without merit. See Exhibit C, Or. Dismissing (July 30, 2014) at 4 (summarizing the United States' and Tribe's arguments). The governments' actions cannot and do not empower the Water Court with the proper jurisdiction, however. The Water Court should have recognized the limitations on its power and deferred to the federal court. Instead, the Water Court ignored Allottees' factual allegations and improperly decided Allottees' claims regarding the nature of their water rights vis-à-vis the Crow Tribe, the adequacy of the United States' representation of them in the Compact negotiations and its waiver of their claims against the Tribe and the United States, and the necessity of a current use list to preserve Allottees' rights issues that far exceed its limited jurisdiction. 35

36 These legal conclusions are reversible error. The Water Court relied on disputed issues of fact and failed to construe those facts in a light most favorable to the Allottees. Moreover, it reached conclusions it lacks jurisdiction to decide and applied federal law incorrectly. HI. THE MONTANA WATER COURT FAILED TO APPLY RELEVANT FEDERAL LAW TO ALLOTTEES' CLAIMS. Even if the Water Court had jurisdiction to decide issues regarding Allottees' water rights, it failed to apply federal law directly on point. The Water Court erroneously made the following legal determinations: 1. That Allottees share in the Crow Tribe's reserved Winters right, and do not have reserved rights distinct from the Tribe. See Exhibit C, Or. Dismissing (July 3o, 2014) at That Allottees' remedy for improper allocation of the Tribal Water Right (as defined by the Compact) is with the Crow Tribe, not with the Water Court. See Exhibit C, Id. at That the Allottees were represented by the United States during the Compact negotiations, although they contend that representation was inadequate. See Exhibit C, Id. at ii. Almost 8o years ago, the United States Supreme Court upheld rulings by the Ninth Circuit and Montana U.S. District Court, which provided that 36

37 a portion of the Tribe's Winters reserved water rights passed to individual Indian allotments as an appurtenance. United States v. Powers, 305 U.S. 527, (1939). In other words, contrary to the Water Court's holding, Powers which involved allotted lands on the Crow Reservation held that reserved Indian allotted water rights were distinct, appurtenant rights, not just a subsumed right under the tribal right. In 1981, in deciding whether Indian reserved water rights are transferable upon sale of an allotment, the Ninth Circuit held that a non- Indian purchaser of allotted lands was entitled to a "ratable share" of the Indian reserved water right. Colville Confederated Tribes v. Walton, 647 F.2d (9th Cir. 1981) (Walton Ii). In so holding, the Ninth Circuit emphasized that an allottee's right to sell his land must include the right to sell the appurtenant water, and that the specific amount of water could be calculated. Id. "If an Indian allottee owns land on a reservation, but is unable to sell the water rights along with that land, the value of the land would be severely impaired." United States v. Washington, 375 F. Supp. 2d 1050, 1060 (W.D. Wash. 2005) (citing Walton II, 647 F.2d at 5o). In contrast, the Water Court held that the Allottees' right to a share of the Crow Indian Reservation reserved water right is a use right held by the Tribe, not a right appurtenant to the allotment, for use by the allotted 37

38 landowner. See Exhibit C, Or. Dismissing (July 3o, 2014) at 8. This conclusion is either far in excess of the Water Court's jurisdiction, or is incorrect, as it ignores Walton Ifs explicit holding that the alienability of an allotment depends on the alienability of the appurtenant water right. Even if the United States argues that the facts in this case compel a different conclusion from Walton II, the Water Court was obligated to follow and apply existing federal law. Its failure to do so is reversible error. Additionally, the Water Court acknowledged the Allottees' claim of inadequate representation, but ignored the legal meaning of that claim, which is that they were, in fact, not represented. The Water Court made no findings as to adequacy of the trustee's representation nor could it on a motion to dismiss and instead simply concluded, without analysis, that the Allottees were represented. See Exhibit C, Or. Dismissing (July 3o, 2014) at 11. From this point forward in its order, the Water Court analyzed Allottees' claims on the assumption that Allottees were represented. See Exhibit C, Id. at 13 ("an objection to a Compact by a represented party requires a showing of fraud, overreaching, or collusion") (emphasis added). Without any irony or acknowledgement of the disputed facts surrounding this issue, it stated, "The parties had an opportunity to ensure that the 38

39 results of the [Compact] negotiation were fair and reasonable during the negotiation process." See Exhibit C, Id. at 14. Thus, it concluded, "Although [Allottees] are dissatisfied by some of the Compact's provisions, [they] have not asserted the Compact was the product of fraud, collusion, or overreaching. Absent such an objection, represented parties to the Compact are bound by the terms of their agreement." See Exhibit C, Id. (emphasis added). This sleight of hand by the Montana Water Court ignores the proper standard of review as well as applicable federal law. Its decision dismissing Allottees' objections and finding Allottees' request for a stay moot must be reversed, with instructions to stay proceedings on the final decree while the proper federal court decides the underlying legal issues. W. THE MONTANA WATER COURT SHOULD HAVE STAYED ITS PROCEEDINGS AND DECLINED TO ADDRESS SUBSTANTIVE ISSUES THAT EXCEED ITS JURISDICTION. "Abstention is a judge-fashioned vehicle for according appropriate deference to the 'respective competence of the state and federal court systems."' England v. Louisiana State Bd. of Med. Examiners, 375 U.S. 411, 415 (1964) (quoting Louisiana P. & L. Co. v. Thibodaux, 36o U.S. 25, 29 (1959)). "[A]bstention 'does not, of course, involve the abdication of 39

40 federal jurisdiction, but only the postponement of its exercise.'" Id. (quoting Harrison v. NAACP, 36o U.S. 167,177 (1959)). Allottees' objections to the preliminary decree approving the Crow Compact were premised on factual and legal issues that have been presented to the federal district court for adjudication in Crow Allottees Assoc, CV BLG-SPW-CSO, see Exhibit A. The Montana Water Court has jurisdiction to determine competing water rights claims, and to give final approval to the Crow Compact. The Montana federal court has jurisdiction to decide Allottees' constitutional and Indian law claims. Even if the nature of Allottees' water right as a usage right or an ownership right is within the Water Court's jurisdiction pursuant to the McCarran Amendment, the Water Court is obligated to apply the relevant federal law, which it failed to do. State ex rel. Greet y, 219 Mont. at 95-96, 712 P.2d at 766. This is not a case of concurrent jurisdiction, where two courts of similar jurisdiction must decide which of them should decide a case and which should abstain. See, e.g., Nielsen v. Brocksmith Land & Livestock, Inc., 2004 MT 101, 321 Mont. 37, 88 P.3d 1269; Agri West, Inc. v. Koyama Farms, Inc., 281 Mont. 167, 933 P.2d 808 (1997); In re Marriage of Limpy, 40