No. 86-270

INTHE SUPREME COURT OF THE STATE OFMONTANA

1988

BUTTE-SILVER ROW LOCAL GOVERNMENT, Petitioner,-vsTHE STATE OFMONTANA; TREASURER OF THE STATE OFMONTANA, DEPARTMENT OF REVENUE OFTHE STATE OFMONTANA, Respondents.

ORIGINAL PROCEEDING:

COUNSEL OFRECORD:

For Petitioner:

JamesH. Goetz argued; Goetz, Madden & Dunn, Rozeman, Montana

For Respondent:
Hon. MikeGreely, AttorneyGeneral, Helena, Montana ClayR. Smithargued, Asst. Atty. General, Helena EricJ. Fehlig, Dept. of Revenue, Helena, Montana Donald MacIntyre, Dept. of NaturalResources, Helena, Bontana 3 

### -'

-- *

. " Filed: .+ +- Submitted: December 2, 1358

Decided: January 19, 1989

ED SMITH

ClerkMr. 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 adeclaratorv judgment declaring the Montana Resource Indemnity Trust Act (1973), (the Act), unconstitutional,insofaras it authorizes the expenditureof 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 respondents1acts 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 theAct. The Butte-Silver Bow Local Government (Butte-Silver Bow) filed its "Petitionfor DeclaratoryJudgmenton 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 environmentaland 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 capacitiesas citizens,residents, electors,and taxpayers of Butte-Silver Bow LocalGovernment."

### 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 appropriationsof the T,egislature." The case is back before this Court upon the agreed findings of fact of the parties adopted bv the 

### DistrictCourt. Petitioners raise the following issues to this Court: 

### 1. Do the petitioners have standj-ngand should this Courtassume original jurisdiction' 2. 

### Is the Montana Resource Indemnity Trust Act, S 

### 15-38-101, et seq., MCA, unconstitutional for authorizing the appropriationand expenditure of Trust funds for purposes other than reclamation of lands? 3. 

### Have respondentsviolated their fiduciaryduties as trustees by using Trust funds for purposes other than the reclamationof 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 jurisdictionbe granted? Petitioners' standing tobring this action isessential 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 proceedsof 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 isproperwhen: (1)

### constitutionalissues ofmajor 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),214Mont. 143, 691P.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 amajor segment of the state, and where the purpose of the declaratory judgment proceedings will serve the office of a writ provided by law



# ..

# ." Grossmanv. State,Dept. of Natural Resources (1984), 309

### Mont. 427, 436, 

### 682P.?d 

### 1319, 1324.

### This petition involves a constitutional issue ofmajor statewide importance. Petitioners are seeking an interpretation by this Court of a section of the Constitution, of amajor actpassed 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 fundingof avariety of stateprograms. 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 Legislaturewere 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: Resolutionof the issues presented herein is necessary to eliminate or reduce a multiplicity of future litigation;



# . . .and to eliminate needless expenditureofpublic fundsonprocedures 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 constitutionalby this opinion,sufficienturgency 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 disturbedby the removal ofnatural 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)

## , 170Mont. 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 theplain meaning of thewordsused, if possible,and if the intent canbe so determined,the courtsmay go no further and apply any other means of interpretation. (Citations omitted.)

### Keller, 553 P.2d at 1006. We thereforemust 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 appropriationpower of the State, that power shall reside in the Legislature. Board of Regents of Higher Education IT. 

### Judge (19751, 168 

### Mont. 433, 446,543 P.2d 1323,1331. The plain language ofArt. IX, 

### sec. 2

### (1)

## ,which is the reclamation sectionwithin the larger Environmentand 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 reclamationof 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 regulationsand standards for that reclamation. This subsection does not mention the Trustor place any limitation uponuse ofTrust 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 intendedpurpose. They state: (2) 

### The legislature shallprovide for a fund, to be known as the resource indemnity trust of the state ofMontana, to be funded 

### by such taxes on the extraction of natural resources as thelegislature may from time to time impose for thatpurpose. (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~rides a source of funding for theTrust. We note that the Trust is not titled the Reclamation of Lands Indemnity Trust nor theMining Lands IndemnityTrust,but the Resource Indemni-tyTrust. 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." Thisdefinition is very broad and indicates an intenton the part 

### of the framers of the provision to have the Trust indemnify the people of the state forthe taking or using ofany resource. - Examining subsection (3),we find a limitationupon 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. Thisprovision may not be construed as 

### a limitation on the use of Trust income,

nor of the use of Trust principal over and above the $100,000,000protected 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." (Emphasisadded.) 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 awhole does not supporta finding of a Trust fund limitation inArt. IX, sec. 2 of the 1972 Montana Constitution. At no other place in the Constitution isa limitationplaced 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-diversionofhighway revenues). For the foregoing reasonswe 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 limitationon 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 hasprovided the funds "shall be used and expended to improve the total environment and rectifv damage thereto." Section 15-38-203(1)

## , MCA. "Total environment" hasbeen 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 isvery broad and allows the Legislature great discretion in determining the uses to which to apply Trust funds. TheAct 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 containedwithin theAct 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 inviolation of the express limitations in 5 15-38-203(2), MCA, and in breach of their fiduciaryduties as trusteesof 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 abreach 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 ashaving been for "general operations," was for the reclamation division of the DSL in 1986. The funding for the reclamation divisionwas 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 followingacts: theMetal Mine ReclamationAct, 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 theseprograms is in violation 

### of 5 15-38-203(2),MCA, iswithoutmerit. In each case, the

### State has shown the fundswere expended for the operation of programs related to improving the total environment or rectifyingdamage 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 feesmust be, and hereby isdenied.

We concur:



## /' Justi e 

# P

JusticesMr. Justice JohnC. Sheehy,dissenting:

Thisdecision continues what has become a commonplacein thehistory of the state ofMontana: the State gets thegold 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, themajority findno nexus between the two provisions, all contained in the same constitutionalarticle. 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 connectionbetween the tax and the purpose of the tax escapes the facile interpretationof the majority. In their response to the petition, the state ofMontana 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~r this Court thanhy anyprtvate trustee.The Resource Indemnity Trustwas never intended to fund the general operations of the State. Other taxes leviedupon extractorsofnatural 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 onmicaceous mineral mines all go to the general fund of the State. Section 15-37-207, MCA. The Resource IndemnityTrust Tax,as a specialtax 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 legislativepurpose 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 itsmineral. 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 onmineral extraction and by allocating spendable trustrevenues:

(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 ofMontana citizens.

How blatant will t.he extraneous use of Resource Indemnity Trust taxes become? To begin with, 30 percent.ofthe interest incomeof the Resource IndemnityTrustFundmust

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 rehabilitationof 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 hydropowerpotential of state-owneddams; 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. Thepreservation and proper use of water is necessary to thewell-being of this dry western state, but the expense of 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 thepurpose 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 topay for such reclamation,thatmonies raised from taxeson parties who extract the natural resources should be limited to thepurposes of the tax. The legislature,by resorting to special tax funds toprovide for general fund obligations is creating an unequal and unfair burden on these special taxpayersandwe should not countenance it.

T concur in the foregoing d's nt of Justice Sheehy. 

# P