DA 14-0567

IN THE SUPREME COURT OF THE STATE OF MONTANA

2015 MT 217

IN RE THE CROW WATER COMPACT,

IN THE MATTER OF THE ADJUDICATION

OF EXISTING AND RESERVED RIGHTS

TO THE USE OF WATER, BOTH SURFACE

AND UNDERGROUND, OF THE CROW

TRIBE OF INDIANS OF THE STATE OF

MONTANA.

APPEAL FROM: Montana Water Court, Cause No. WC-2012-06

Honorable Russ McElyea, Chief Water Judge

COUNSEL OF RECORD:

For Appellants:

Hertha L. Lund, Breeann M. Johnson, Lund Law, PLLC,

Bozeman, Montana

Elizabeth A. Brennan, Brennan Law & Mediation, PLLC,

Missoula, Montana

For Appellee United States:

John C. Cruden, Assistant Attorney General, John L. Smeltzer, Appellate

Attorney, United States Department of Justice, Washington, DC

For Appellee Crow Tribe:

Nathan A. Espeland, Espeland Law Office, PLLC, Columbus, Montana

Merrill C. Godfrey, Akin Gump Strauss Hauer & Feld, LLP,

Washington, DC

For Appellee State of Montana:

Timothy C. Fox, Montana Attorney General, Jeremiah D. Weiner, 

Assistant Attorney General, Helena, Montana

July 29 2015

Case Number: DA 14-0567
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Submitted on Briefs: June 10, 2015

 Decided: July 29, 2015

Filed:

__________________________________________

Clerk
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Chief Justice Mike McGrath delivered the Opinion of the Court.

¶1 Members of the Crow Allottees Association appeal from the Montana Water 

Court’s order of July 30, 2014, dismissing their objections to the Crow Water Compact 

and refusing to stay proceedings. We affirm.

ISSUES

¶2 Issue One: Whether the Water Court applied the proper legal standard of review 

in granting the motions to dismiss the Allottees’ objections.

¶3 Issue Two: Whether the Water Court exceeded its jurisdiction by dismissing the 

Allottees’ objections rather than staying consideration of the Compact pending 

resolution of the Allottees’ action in United States District Court.

¶4 Issue Three: Whether the Water Court erred in determining that the Allottees do 

not have individual water rights apart from the Crow Tribal Water Right; that the 

United States adequately represented the Allottees during the Compact 

negotiations; and whether a “current use list” is a prerequisite for including the 

Compact in a final decree.

BACKGROUND

¶5 This case arises from the Crow Compact, an agreement among the United States, 

the Crow Tribe, and the State of Montana. The Compact recognizes and specifies a 

Tribal Water Right of the Crow Tribe and its members in a number of sources of water 

that abut or cross the Crow Indian Reservation in Montana. The Compact also provides 

for cash payments to the Tribe, allocates coal tax revenue, and creates a tribal 

administrative structure for distribution of the Tribal Water Right. The Crow Tribe, the 

United States through the Department of the Interior, and the Montana Reserved Water 

Rights Compact Commission agreed to the terms of the Compact in 1999, and the 
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Montana Legislature ratified it the same year. The Compact is codified at § 85-20-901, 

MCA. The Crow Tribe ratified the Compact by vote of its members in 2011. 

¶6 The United States Congress “authorized, ratified and confirmed” the Compact in 

the Crow Tribe Water Rights Settlement Act of 2010 (“Act”), Pub. L. 111-291, 

§ 404(a)(1). The Settlement Act provides that the Tribal Water Right established by the 

Compact “shall be held in trust by the United States for the use and benefit of the Tribe 

and the allottees” and that the right “shall not be subject to forfeiture or abandonment.” 

Act, § 407(c). The Crow Tribe on behalf of itself and its members, and the United States 

as trustee for the Allottees, waived and released all other claims to water in return for 

those recognized in the Compact. Act, § 410(a). The Compact contains a similar 

provision. Section 85-20-901, MCA, Art. VII, Sec. C. The Compact is a negotiated 

compromise among the parties, in lieu of settling the water claims of the Crow Tribe and 

its members in protracted, expensive and uncertain litigation.

¶7 The Settlement Act expresses the “intent of Congress to provide to each allottee 

benefits that are equivalent to or exceed the benefits allottees possess as of the date of 

enactment of the Act . . . .” Act, § 407(a) (emphasis added). The Act provides that 

“allottees shall be entitled to a just and equitable allocation of water for irrigation 

purposes” that “shall be satisfied from the tribal water rights.” Act, § 407(d). After 

exhausting relief provided under tribal law, Allottees with claims relating to water may 

seek relief under 25 U.S.C. § 381 (authorizing the Secretary of the Interior to secure a 

just and equal distribution of water) or any other applicable law. Act, § 407(d). 
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¶8 The Compact requires that the Montana Water Court a enter a final decree 

incorporating the Tribal Water Right as set out in the Compact:

The water rights and other rights confirmed to the Tribe in this Compact are 

in full and final satisfaction of the water right claims of the Tribe and the 

United States on behalf of the Tribe and its members, including federal 

reserved water rights claims based in Winters v. United States, 207 U.S. 

564 (1908). In consideration of the rights confirmed to the Tribe in this 

Compact, and of performance by the State of Montana and the United 

States of all actions required by this Compact, including entry of a final 

order issuing the decree of the reserved water right of the Tribe held in 

trust by the United States as quantified in the Compact and displayed in 

Appendix 1, the Tribe and the United States as trustee for the Tribe and 

Tribal members hereby waive, release, and relinquish any and all claims to 

water rights or to the use of water within the State of Montana existing on 

the date this Compact is ratified by the State, the Tribe, and Congress and 

conditional upon a final decree, whichever date is later.

Section 85-20-901, MCA, Art. VII, Sec. C (emphasis added). The parties to the Compact 

complied with this provision by submitting it to the Montana Water Court for entry of a 

judicial decree of the Compact’s water rights provisions. Pursuant to § 85-2-702(3), 

MCA, the Water Court has limited discretion in this process. Montana law provides that 

the terms of a compact “must be included in a preliminary decree,” and unless an 

objection to a compact is sustained, the decree of the Water Court must include the rights 

established by the compact “without alteration.” Section 85-2-702(3), MCA. The 

Compact requires that the Water Court’s review of the Compact be “limited to Article III 

and Appendix 1” thereof, which contain the specific water rights agreed to. Section 

85-20-901, MCA, Art. VII, Sec. B.3. The Settlement Act contains an automatic repeal if 

the Secretary of the Interior does not publish a statement of findings by March 31, 2016, 
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which must include a finding that the Montana Water Court has issued a final judgment 

and decree approving the Compact. Act, § 410(e).

¶9 In 2012 the Water Court entered a preliminary decree containing the terms of the 

Compact, and served and published notice of the decree and of rights to object. The 

Water Court sent notice of the preliminary decree to over 16,000 persons and entities and 

received approximately 100 objections. 

¶10 In June 2013 a group of Crow tribal member Allottees objected to the Compact in 

the Water Court. Allottees are persons who hold interests in allotments, which are 

parcels of former Tribal land, mostly created by the General Allotment Act of 1887, 

25 U.S.C. §§ 331-358. Big Spring v. Conway, 2011 MT 109, ¶ 31, 360 Mont. 370, 255 

P.3d 121. Among other things, the General Allotment Act aimed to break tribal 

organization on reservations and replace it with plots of private land farmed by individual 

Indians who would then be assimilated into the non-tribal culture. While some Allottees 

hold their land in fee simple, the interests of many others are held in trust by the United 

States. The Indian Reorganization Act, 25 U.S.C. § 462, ended allotment of reservation 

lands in 1934 and extended the allotment trust period indefinitely. 

¶11 The Allottees made a number of contentions in their Water Court objections to the 

Compact. Their contentions are centered on the argument that they have reserved water 

rights appurtenant to their allotments, and that these rights are separate from the reserved 

rights held by the Tribe as recognized in Winters v. U.S., 207 U.S. 564, 28 S. Ct. 207 

(1907). The Allottees’ second major contention is that they did not receive adequate 

notice of the proceedings leading to the Compact and that their interests in the Compact 
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negotiations were not adequately represented by the United States. The contend that their 

water rights cannot be part of the decree of the Water Court; that their rights will be 

harmed by implementation of the Compact; and that the Water Court lacks jurisdiction to 

adjudicate their rights. The Allottees also asked the Water Court to stay its proceedings 

concerning the Compact pending resolution of a separate lawsuit the Allottees brought in 

United States District Court in May 2014. 

¶12 The Allottees’ action, Crow Allottees Assoc. v. United States, Cause No.

CV-14-62-BLG, United States District Court for the District of Montana, asserts claims 

that the United States breached its fiduciary duties to the Allottees by failing to protect 

their water rights in the Compact. The Allottees further contend that the United States 

violated their due process rights by failing to adequately represent them in Compact 

proceedings. The complaint seeks a declaratory ruling and order that the United States be 

required to provide the Allottees with adequate legal counsel in all matters regarding the 

Compact.

¶13 Upon motion of the Crow Tribe and the United States, the Water Court dismissed 

the Allottees’ objections to the Compact and denied their request for a stay. The Water 

Court concluded that it had jurisdiction to review the Compact under federal and state 

law, including the McCarran Amendment, 43 U.S.C. § 666; §§ 85-2-231, -234, and -702, 

MCA; and Article VI of the Compact. The Water Court concluded that under federal 

law, United States v. Powers, 305 U.S. 527, 59 S. Ct. 344 (1939), and the Compact, the 

Allottees are entitled to a “just and equal share” of the Tribal Water Right recognized by 

Winters and established in the Compact as “the right of the Crow Tribe, including any 
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Tribal member, to divert, use, or store water as described in Article III of this Compact.” 

Section 85-20-901, MCA, Art. II, Sec. 30. The right of Allottees to a just and equitable 

allocation of the Tribal Water Right was confirmed by Congress in the Settlement Act, 

§ 407(d)(2), (3). 

¶14 The Water Court noted that the responsibility for allocating water to the Allottees 

rests with the Secretary of the Interior under the General Allotment Act, 25 U.S.C. § 381, 

and is delegated to the Crow Tribe by the Compact. Section 85-20-901, MCA, Art. IV, 

Sec. A.2.a, b. The Compact requires the Tribe to provide “Indians residing on the 

Reservation . . . to a just and equal portion of the Tribal Water Right.” Art. IV, Sec. B.1. 

Congress included similar guarantees in the Settlement Act, §§ 402(1)(B) and 

407(f)(2)(A). Pursuant to these provisions, the Water Court determined that any claims 

that the Allottees have regarding allocation of the Tribal Water Right must be addressed 

in some forum other than the Montana Water Court.

¶15 The Water Court observed that the United States, pursuant to its trust 

responsibility to administer Indian lands and property, Lewis v. Hanson, 124 Mont. 492, 

496-97, 227 P.2d 70, 71 (1951), agrees that it represented the Allottees during the process 

of negotiating the Compact. The United States as trustee waived and released any claims 

of the Allottees in exchange for recognition of the Tribal Water Right and the Allottees’ 

right to use a just and equal share of that right. Section 85-20-901, MCA; Act,

§ 410(a)(2). The Allottees contend that they were not individually consulted and were 

entitled to independent legal representation furnished by the United States. As noted, 
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they commenced an action in United States District Court seeking to establish that

position. 

¶16 The Water Court determined that because the Allottees were represented by the 

United States during Compact proceedings, their status is that of represented parties. The 

Water Court noted the “unique nature of water rights Compacts, including prior review 

and approval by the Governor, the Legislature, the Department of the Interior, Congress, 

and the Crow Tribe.” Relying on case law regarding objections to consent decrees, the 

Water Court concluded that consideration of objections by represented parties is limited 

to a required showing that the negotiations were the product of fraud, collusion or 

overreaching among the negotiating parties. Officers for Justice v. Civil Service Comm., 

688 F.2d 615, 625 (9th Cir. 1982). This high standard precludes a reviewing court from 

substituting its judgment for that of the negotiating and settling parties. The Water Court 

determined that the Allottees, while dissatisfied, have not asserted that the Compact was 

the product of fraud, collusion or overreaching and so are bound by its terms.

¶17 The Water Court determined that the purpose of its proceeding 

is not for the Court to assess the relative merits of each party’s position and 

adjust the outcome to conform to what the parties might have obtained from 

trial. That balancing of interests was addressed by the parties themselves 

during the negotiation process and reviewed at numerous levels by 

representatives of those parties after the Compact was finalized. 

Further, since the objective of the Compact is “to define the Tribe’s Winters rights, 

eliminate litigation risk and expense and achieve finality for the Tribe and other parties,” 

there is no requirement at this stage that the Allottees’ water claims be separately 

quantified. The Water Court determined that it was not tasked to review whether the 
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Tribe or other parties have fulfilled their responsibilities under the Compact, such as 

preparing a current water usage list.

¶18 The Water Court therefore granted the motions of the United States and the Crow 

Tribe and dismissed the Allottees’ objections to the adoption of the Compact. The 

Allottees appeal.

STANDARD OF REVIEW

¶19 This Court applies the same standards of review to decisions of the Water Court as 

it does to decisions of a district court. Mont. Trout Unlimited v. Beaverhead Water Co.,

2011 MT 151, ¶ 16, 361 Mont. 77, 255 P.2d 179. This Court reviews the Water Court’s 

findings of fact under the clearly erroneous standard. Weinheimer Ranch v. Pospisil, 

2013 MT 87, ¶ 19, 369 Mont. 419, 299 P.3d 327. This Court reviews the Water Court’s 

conclusions of law de novo to determine whether they are correct. Skelton Ranch v. 

Pondera Co. Canal & Res. Co., 2014 MT 167, ¶ 26, 375 Mont. 327, 328 P.3d 644. 

¶20 This Court reviews a court’s orders related to trial administration, such as a motion 

to stay proceedings, for an abuse of discretion. Wamsley v. Nodak Mut. Ins. Co., 2008 

MT 56, ¶ 23, 341 Mont. 467, 178 P.3d 102.

DISCUSSION

¶21 Issue One: Whether the Water Court applied the proper legal standard of review 

in granting the motions to dismiss the Allottees’ objections. 

¶22 The Allottees contend that the Water Court erred in dismissing their objections 

without applying Rule 12(b)(6), M. R. Civ. P., and accepting the truth of their allegations. 
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¶23 Water Court judges have the powers of a district court within their area of 

jurisdiction, § 3-7-224(3), MCA, and the Montana Rules of Civil Procedure generally 

apply to Water Court proceedings. Rule 2(b), Montana Water Adjudication Rules. 

However, that does not mean that Rule 12 (b)(6), M. R. Civ. P., applies to the Water 

Court’s consideration of an objection to a water compact.

¶24 The Allottees have not presented any persuasive authority that the Water Court is 

bound to apply Rule 12(b)(6) when considering the disposition of an objection to a 

preliminary decree. Rule 12(b)(6) applies when a party moves to dismiss a complaint in 

a civil action. Western Sec. Bank v. Eide Bailly, 2010 MT 291, ¶ 55, 359 Mont. 34, 249 

P.3d 35. There is nothing that requires the Water Court to apply Rule 12(b)(6) 

jurisprudence in its consideration of an objection to a preliminary decree. There is no 

authority that requires the Water Court to accept the truth of factual allegations made in 

an objection to a preliminary decree.1 To the contrary, in water rights matters a properly 

filed claim of water right “constitutes prima facie proof of its content until the issuance of 

a final decree.” Section 85-2-227(1), MCA. 

¶25 Therefore, the Water Court did not err by not applying Rule 12(b)(6), 

M. R. Civ. P., in its review of the Allottees’ objections to the Compact.

 

1

In the Water Court proceedings the Allottees argued that the court “must construe 

Allottees’ objections as being true . . . .”
12

¶26 Issue Two: Whether the Water Court exceeded its jurisdiction by dismissing the 

Allottees’ objections rather than staying consideration of the Compact pending 

resolution of the Allottees’ action in United States District Court. 

¶27 The Allottees acknowledge that the McCarran Amendment, 43 USC § 666, 

specifically allows state courts to adjudicate federal and Indian reserved water rights. 

They contend, however, that this only allows state courts to “decide issues of federal 

Indian or constitutional law” but withholds from state courts the power to “decide Indian 

law issues of first impression; [they] can only apply existing federal law.” Allottees cite 

Greely v. Confederated Salish and Kootenai Tribes, 219 Mont. 76, 712 P.2d 754 (1985) 

in support of this novel proposition. However, nothing in that decision supports such a 

proposition. Greely establishes that Montana courts are sufficient to provide a McCarran 

Amendment forum for the determination of federal and Indian water rights, and that they 

are “required to follow federal law with regard to those rights.” Greely, 219 Mont. at 95, 

712 F.2d at 765. 

¶28 In this case the Water Court expressly applied federal law in its consideration of 

the Allottees’ arguments that they have water rights that are “distinct from the Crow 

Tribe’s reserved right.” The Water Court applied Powers to determine that the Allottees’ 

have water rights that are derived from the reserved rights of the Crow Tribe, and that 

they are entitled to use a just and equitable share of the Tribe’s rights. As discussed 

above, the Tribe, the United States Congress and the State of Montana have all expressly 

recognized the Allottees’ rights to a share of the Crow Tribal Water Right. Allottee 

rights are recognized in the Compact, which requires the Tribe to provide “Indians 

residing on the Reservation of . . . a right . . . to a just and equal portion of the Tribal 
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Water Right.” Section 85-20-901, MCA, Art. IV, Sec. B.1. Congress included similar 

express guarantees in the Settlement Act, §§ 402(1)(B) and 407(f)(2)(A), stating “the 

intent of Congress to provide to each allottee benefits that are equivalent to or exceed the 

benefits allottees possess as of the date of enactment of this Act . . . .” 

¶29 The Allottees contend that the Water Court erred in treating them as represented 

parties for purposes of considering the Compact. As noted above, existing law restricts 

the Water Court’s power over Compact issues. The Compact was the product of 

extensive negotiations over a period of years, resulting in a negotiated compromise of 

interests and claims. 

¶30 Montana law requires that the terms of a compact “must be included in a 

preliminary decree” and unless an objection to a compact is sustained, the terms of the 

compact must be included in the decree “without alteration.” Section 85-2-702(3), MCA. 

The Compact requires that the Water Court’s review of the Compact be “limited to 

Article III and Appendix 1” thereof, which specify in detail the Crow Tribe’s reserved 

water rights. Section 85-20-901, MCA, Art. VII, Sec. B.3. As the Water Court 

recognized, determining the adequacy of the United States’ representation of the 

Allottees is not within the scope of its review. The Water Court properly concluded that 

since the Allottees were represented in the Compact negotiations, its review of the 

compact was limited to determining whether the Compact was the “product of fraud, 

collusion or overreaching.” In doing so, the Water Court relied, as it has in other cases,2

 

2 Matter of the Adjudication of Existing and Reserved Rights to the Use of Water of the 

United States Forest Service Within the State of Montana, Water Court Cause No. WC-2007-04. 
14

upon the established rules for judicial oversight of consent decrees as set out in Officers 

for Justice. 

¶31 The Allottees contend that the United States inadequately represented their 

interests during the extended negotiations that led to adoption of the Compact. They 

contend that they were entitled to separate representation that should have resulted in 

recognition and a listing of their claimed separate water rights. However, they have 

acknowledged, by filing a separate action on these issues in United States District Court, 

that this is not an issue that the Water Court can resolve. In fact, the Allottees contend 

that only the United States District Court can determine whether the United States 

breached a fiduciary duty to them. The Water Court determined only that the Allottees 

were represented by the United States, which they do not deny, and that this 

representation determined the level of scrutiny. The Water Court applied the fraud or 

collusion analysis from Officers for Justice. The Allottees contend that this was the 

wrong analysis to apply, but their alternative is that the Water Court should have applied 

a Rule 12(b)(6) analysis, construing all their allegations as true. As discussed above, 

Rule 12(b)(6) does not apply to this situation and the Water Court conducted the proper 

analysis.

¶32 The Allottees’ contend that the Water Court should have stayed its final action on 

the Compact pending resolution of their separate lawsuit in United States District Court. 

We review a lower court’s determination on a motion to stay proceedings to determine 

whether the court abused its discretion. Lamb v. Dist. Ct., 2010 MT 141, ¶ 14, 356 Mont. 

534, 234 P.3d 893. We consider whether the decision on the request for a stay was 
15

arbitrary or exceeded the bounds of reason resulting in substantial injustice. Wamsley, 

¶ 33.

¶33 It is clear that a final resolution of the Allottees’ federal action will take an 

unknown but substantial period of time, which alone could fatally doom the future of the 

Compact. This would happen not because of any determination of the merits of the 

Compact, but simply because of the time it would take to finally resolve the Allottees’ 

lawsuit and its aftermath. Congress provided for an automatic repeal of its approval of 

the Compact if the Water Court’s decree, including the Compact, is not issued prior to 

March 31, 2016. Act, § 415. It would work a hardship and a potential injustice on the 

parties who have worked for many years to develop and implement the Compact to put 

everything in abeyance for an unlimited time, and to risk repeal of the Compact, to see 

whether the Allottees can prevail on their representation claims in federal court. We have

upheld a district court’s discretion refusing to stay a Montana lawsuit pending the 

outcome of a related lawsuit in another state, Wamsley, ¶ 33, or in a federal court, Henry 

v. Dist. Ct., 198 Mont. 8, 14, 645 P.2d 1350, 1353 (1982).

¶34 The Water Court acted within its discretionary power to deny the Allottees’ 

request for a stay and we find no error.

¶35 Issue Three: Whether the Water Court erred in determining that the Allottees do 

not have individual water rights apart from the Crow Tribal Water Right; that the 

United States adequately represented the Allottees during the Compact 

negotiations; and whether a “current use list” is a prerequisite for including the 

Compact in a final decree.

¶36 The issues regarding the nature of the Allottees’ water rights and the 

representation of the Allottees during the negotiations were discussed above and need not 
16

be repeated. The Allottees’ objections to the Compact filed in the Water Court included 

the assertion that the Crow Tribe and the United States had not prepared a list of “current 

uses” of the Tribal Water Right, and that no action should be taken on the Compact until 

that list is prepared. 

¶37 Article IV, Section E.2 of the Compact provides that after the Montana Legislature 

ratifies the Compact, the United States and the Crow Tribal Water Rights Division will 

provide the State with a “report listing all current uses of the Tribal Water Right, 

including uses by Tribal members . . . . The Allottees contend that no such report has 

been submitted to the State and that the Water Court should therefore not include the 

Compact in a final decree. However, the Compact attaches no such significance to the 

water use report, and specifically provides that the Compact is effective when “ratified by 

the Tribe, by the State and by the Congress of the United States. . . .” Section 85-20-902,

MCA, Art. VII, Sec. A. Those ratifications have taken place. The Congressional 

Settlement Act, § 410(e), likewise, does not make the water use report a prerequisite to 

the validity of the Compact. 

¶38 More to the point, there is no requirement that the specific water rights or claims 

of these Allottees be quantified as a precondition to implementing the Compact. As the 

Water Court explained:

The objective of the Compact, which is a negotiated settlement, is to define 

the Tribe’s Winters rights, eliminate litigation risk and expense, and 

achieve finality for the Tribe and other parties to the agreement. Although 

the parties to a Compact might agree to define allottees’ right to use of the 

Tribal reserved water right, such a definition is not required to achieve 

settlement. Because the allottees’ rights to use of water are derived from 

the Tribal reserved water right, there is no requirement in case law or 
17

statute that a Compact separately quantify the allottees’ rights to use of that 

water.

We find no basis for concluding that the Water Court should have deferred action on the 

Compact based upon the absence of a current use list.

¶39 We affirm the Water Court’s order dismissing the Allottees’ objections to the 

Compact and refusing to order a stay.

¶40 The Water Court’s order of July 30, 2014, is affirmed.

/S/ MIKE McGRATH

We Concur:

/S/ BETH BAKER

/S/ PATRICIA COTTER

/S/ JAMES JEREMIAH SHEA

/S/ MICHAEL E WHEAT

/S/ LAURIE McKINNON

/S/ JIM RICE