No. 85-603 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

BURLINGTON NORTHERN RAILROAD COMPANY, 

Petitioner and Appellant, 

MONTANA DEPARTMENT OF PUBLIC SERVICE 

REGULATION, PUBLIC SERVICE COMMISSION, 

THOMAS J. SCHNEIDER, CLYDE T. JARVIS, 

JOHN DRISCOLL, HOWARD ELLIS AND DANNY 

OBERG , 

Respondents and Respondents. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable Charles Luedke, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Crowley Law Firm; Michael E. Webster argued, Billings, 

Montana 

For Respondent: 

Clay R. Smith argued, Asst. Attorney General, Helena, 

Montana 

Submitted: M~Y 141 1986 

Decided: June 5, 1986 

*, 41 

Clerk 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

After a hearing and submission of briefs, the Montana 

Public Service Commission (PSC) dismissed a petition by 

Burlington Northern Railroad Company (BN) to close its operation at Lodge Grass, Montana. The dismissal was based on the 

PSC's conclusion that it lacked jurisdiction. Lodge Grass is 

on the Crow Indian Reservation. BN sought review in the 

District Court for Yellowstone County, and the court affirmed 

the PSC's order. We reverse. 

The issue is whether the PSC properly determined that it 

does not have regulatory jurisdiction over the proposed 

closure of the Lodge Grass Station. 

BN's predecessor, Big Horn Southern Railroad Company, 

was granted a right-of-way through the Crow Indian Reservation by Act of Congress in 1889. The purpose of the rightof-way was " for the construction, operation, and maintenance 

of [Big Horn ' s] railroad, telegraph, and telephone 

lines . . ." Section 3 of the Act provided in part that "the 

surveys, construction, and operation of such railroad shall 

be conducted with due regard for the rights of the Indians, 

and in accordance with such rules and regulations as the 

Secretary of the Interior may make to carry out this 

provision. . . " The Act was amended in 1893 to expand the 

time frame for construction and to modify the legal description of the right-of-way. The Lodge Grass station was constructed on the right-of-way, and BN eventually succeeded to 

Big Horn's interest under the 1889 and 1893 Acts. 

In 1981, BN requested authority from the PSC to discontinue its station at Lodge Grass. The request was made under 

A.R.M. S 38.4.301. The reasons given for the request were 

the lack of business at Lodge Grass and the availability of a 
station at Hardin to take over the Lodge Grass station's 

remaining duties. On July 27, 1982, the PSC held a public 

hearing on the proposed closure. There was testimony that 

there had been no shipments into or out of the Lodge Grass 

station for over two years. There was also testimony about 

proposed Tribal business ventures which would use the station. At the end of the hearing, the PSC requested briefs on 

whether it had jurisdiction to decide upon BN's application. 

The Crow Tribe has since enacted a common carrier ordinance. The ordinance was not relied upon by either the PSC 

or the District Court in their decisions. 

In concluding that it did not have jurisdiction over 

BN's petition, the PSC found that: (1) Burlington Northern 

had succeeded to Big Horn's interest under the 1889 and 1893 

Acts; (2) the 1889 Act "provided generally that the surveying, construction, and operation of the right-of-way was to 

be subject to the approval and/or regulations of the Secretary of Interior;" and (3) " [tlhe impact of the proposed 

abandonment will fall predominantly, if not exclusively, on 

the Lodge Grass agency and Tribal members dependent upon rail 

service to that station." Relying on White Mountain Apache 

Tribe v. Bracker (1980), 448 U.S. 136, 100 S.Ct. 2578, 65 

IJ.Ed.2d 665, the PSC concluded that the propriety of its 

asserting jurisdiction over BN's application involved balancing State and federal/tribal interests and that 

federal/tribal interests predominated under these circumstances. The District Court affirmed this decision on 

cross-motions for summary judgment. 

The White Mountain Apache test applies where "a State 

asserts authority over the conduct of non-Indians engaging in 

activity on the reservation." White Mountain Apache, 448 
U.S. at 144. BN argues that its interest in the railroad 

right-of-way is in the nature of a fee interest, and that the 

balancing test set out in White Mountain Apache does not 

apply. BN's argument is not persuasive. The PSC cites 

United States v. Soldana (1918), 246 U.S. 530, as authority 

that the title of the Crow Tribe to the land within the Big 

Horn (now BN) right-of-way was not extinguished when the 

right-of-way wa.s created. We conclude that the Crow Tribe 

retains an interest in the land underlying the right-of-way 

and therefore, the White Mountain Apache balancing test 

applies. 

White Mountain A~ache concerned the State of Arizona's 

efforts to apply its motor carrier license and use fuel taxes 

to a non-Indian enterprise operating solely on the Fort 

Apache Reservation. The Court held that the taxes were 

pre-empted by federal law, but distinguished the process it 

used to reach this conclusion from standard preemption analysis. The Court held that: 

[wlhen on-reservation conduct involving only Indians is at issue, state law is generally inapplicable, for the State's regulatory interest is likely 

to be minimal and the federal interest in encouraging tribal self-government is at its strongest 

(citations omitted) . More difficult questions 

arise where, as here, a State asserts authority 

over the conduct of non-Indians engaging in activity on the reservation. In such cases we have 

examined the language of the relevant federal 

treaties and statutes in terms of both the broad 

policies that underlie them and the notions of 

sovereignty that have developed from historical 

traditions of tribal independence. This inquiry is 

not dependent on mechanical or absolute conceptions 

of state or tribal sovereignty, but has called for 

a particularized inquiry into the nature of the 

state, federal, and tribal interests at stake, an 

inquiry designed to determine whether, in the 

specific context, the exercise of state authority 

would violate federal law (citations omitted). 
White Mountain Apache, 448 U.S. at 144-45. 

In White Mountain Apache a crucial factor in the balance 

of State interests against federalltribal interests was the 

comprehensive scheme of federal regulation of the harvesting 

of Indian timber, in the form of Acts of Congress, detailed 

Interior Department regulations, and day-to-day supervisj.on 

by the Bureau of Indian Affairs. White Mountain Apache, 448 

U.S. at 145-48. Also weighed in the Court's consideration 

were the economic burden on the Tribe of the asserted taxes, 

and the "significant geographical component of tribal sovereignty." White Mountain Apache, 448 U.S. at 151. On the 

other side of the balance was the State's general interest in 

raising revenue. White Mountain Apache, 448 U.S. at 150. 

The Court held that the federalltribal interests outweighed 

the State's 'interest, and the State was denied jurisdiction. 

In the present case, in marked contrast, there is an 

absence of federal regulation of railroad rights-of-way over 

Indian land, although there is clearly authority for it. The 

absence of regulatory action by both the federal government 

and the Crow Tribe during a period of close to 100 years is 

highly significant. It could even be called acquiescence, in 

view of Montana1 s 70 years of regulation of railroads, including railroads running through this reservation. Montana 

has enacted a comprehensive regulatory scheme governing all 

railroads doing business in this state, at Title 69, Chapter 

14, MCA. 

Second, and also in contrast to White Mountain Apache, 

the state jurisdiction sought here is regulatory jurisdiction 

for the public good, not authority to tax. The PSC has the 

same statutory obligation to consider the interests of the 
Indian people of Montana and of the Crow Reservation as of 

the non-Indian or off-reservation people. 

We accept the finding that the impact of closure of the 

Lodge Grass station would primarily affect tribal members, 

because that finding is not clearly erroneous. - See City of 

Billings v. Billings Firefighters (Mont. 1982), 651 P.2d 627, 

632, 39 St.Rep. 1844, 1849. However, because of the testimony that the station was not used for over 2 years preceding 

BN's petition and was used very infrequently before that 

time, we do not weigh this factor heavily. 

Under White Mountain Apache we have weighed the interest 

of the State, which is represented by more than 70 years of 

comprehensive regulation of all railroads in Montana, both 

on-reservation and off-reservation, as compared to the 

federal/tribal interest, which is represented by an absence 

of federal statutory or administrative regulation and an 

absence of any action by the Crow Tribe in the nature of an 

ordinance or other attempt to regulate the railroads on the 

reservation. We emphasize that we are not ruling upon the 

Crow Tribe's common carrier ordinance, which is not properly 

before us. We conclude that the State's interest significantly outweighs the federal/tribal interest. We therefore 

reverse the decision of the PSC and the District Court. We 

order the PSC to assume jurisdiction and to proceed to rule 

upon BN's petition to close the Lodge Grass station. 

We Concur: 

Mr. Justice John C. Sheehy, concurring specially and 

dissenting: 

I agree of course that some governmental entity must 

have jurisdiction of subject matter here, the proposed 

closure of the railroad sta.tion at Lodge Grass, and that at 

the time of the proceedings here, the PSC had that 

jurisdiction. 

In the meantime though, the Crow tribe has adopted a 

regulatory ordinance applying to railroads which is the 

subject of an action in the federal district court to 

determine its validity. Immediately upon remand by us to the 

PSC for further action relating to the closure, the question 

will undoubtedly arise whether, in view of the adoption of 

the tribal ordinance, the PSC has any further jurisdiction, 

or whether it properly belongs in the Crow tribe. 

Undoubtedly the federal district court will be called upon to 

decide that issue. Anticipating this, I would stay the 

effect of our decision here until a final determination is 

made in the federal district court as to whether the Crow 

tribe now has exclusive jurisdiction of the proposed closure 

under the tribal ordinance. In that way, we would avoid a 

potential conflict between the federal and state courts in 

this matter. 

ch4-4 Justice