Opinion ID: 1152674
Heading Depth: 1
Heading Rank: 4

Heading: the best interests of the trust

Text: An examination of the district court's findings of fact and conclusions of law establishes that on de novo review the court considered the best interests of the trust and correctly concluded not to terminate the easement. In exercising discretion to terminate the easement, the Director is bound to act in the best interests of the trust beneficiaries. See National Parks & Conservation Assoc. v. Board of State Lands, 869 P.2d 909, 916 (Utah 1993) (finding that trustee's duty of loyalty requires state to act solely for benefit of trust). The Director must (a) seek to maximize trust land revenue, consistent with the balancing of short and long-term interests so that long-term benefits are not lost in an effort to maximize short-term gains; (b) maintain integrity of the trust and prevent misapplication of its lands and revenues through prudent management; and (c) make the interest of the school and institutional trust beneficiaries paramount. Utah Code Ann. § 65A-1-4(2). [1] In sum, in keeping the interests of the trust paramount, the Division must manage state school trust lands in the most prudent and profitable manner possible. Colman v. Utah State Land Bd., 17 Utah 2d 14, 403 P.2d 781, 783 (1965). ACP argues that the district court failed to consider the best interests of the trust in concluding not to terminate the easement. However, the record shows that even though the district court may not have specifically enumerated the interests of the trust, it did consider the trust's best interests in deciding not to terminate the easement. The court's findings of fact and conclusions of law demonstrate a recognition that trust lands were involved and an understanding of the nature of the fiduciary obligations involved. The court stated in its findings of fact that the Director had exercised his discretion in a manner consistent with the rules, and statutes and that the decision was consistent with the best interests of the trust beneficiaries. The court also stated in its conclusions of law that in exercising trust duties, the State must maximize trust land revenue in a manner that would serve the best interest of the beneficiaries within the provisions of applicable law. The district court correctly concluded that termination of the easement before the ICC has adjudicated the reasonableness of the tariff would not benefit the school trust lands. ACP, however, argues that terminating the easement will benefit the trust and posits the following reasoning: More money is in the best interests of the trust; the trust is not acquiring more money because ACP's mine is not operating; ACP's mine is not operating because the rates are unreasonably high; if the easement is terminated, the tariffs will have to be lowered; therefore, the easement must be terminated until a lower tariff is set; and by lowering the tariff, ACP will begin mining and start shipping phosphate across the pipeline and paying royalties to the trust. This argument is flawed because it begins and ends with the assumption that rates are unreasonable, which is a determination that belongs exclusively to the ICC and has not yet been made. See Chicago & North Western Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 318, 101 S.Ct. 1124, 1130, 67 L.Ed.2d 258 (1981); see also Burlington Northern, Inc. v. United States, 459 U.S. 131, 141, 103 S.Ct. 514, 521, 74 L.Ed.2d 311 (1982) (finding that primary jurisdiction to determine the reasonableness of rates lies with the [ICC]). In view of the fact that the ICC has exclusive jurisdiction to determine the reasonableness of this tariff and is currently in the process of doing so, it is not in the best interests of the trust for this court to terminate the easement, thereby circumventing those proceedings and forcing FS Industries to close its mine. Such action by the court could subject the trust to potentially expensive litigation with Chevron and FS Industries if the ICC eventually upholds the reasonableness of the proposed tariff, and furthermore, it is not clear that terminating the easement will provide any benefit to the trust. [2] For instance, even if this court were to terminate the easement, the State does not have the authority to set specific rates that would allow ACP to mine and ship phosphate. And if the State were to take the further step of terminating and then reissuing the easement conditioned upon providing fair access to ACP, the determination of fair access would still be in the exclusive jurisdiction of the ICC. See Maislin Indus., U.S., Inc. v. Primary Steel, Inc., 497 U.S. 116, 119, 110 S.Ct. 2759, 2762, 111 L.Ed.2d 94 (1990) (finding that ICC has primary responsibility for determining whether a rate or practice is reasonable). Conversely, if the court does not terminate the easement and the ICC eventually determines that the rates are unreasonable, claims filed by the Division in the current ICC proceeding and pending antitrust suit protect the interests of the trust's beneficiaries. Finally, by approving the assignment of the easement from Chevron to FS Industries, the Division is not precluded from pursuing remedies for damages through ICC proceedings or the pending antitrust litigation. In conclusion, it is not in the best interests of the trust to terminate the easement because such action would be inconsistent with the possibility that the ICC may eventually uphold the reasonableness of the proposed tariffs. Therefore, the district court correctly concluded that rule XXX-XX-XXXX is discretionary and that the Director exercised this discretion in the best interests of the trust. We affirm the judgment of the district court. ZIMMERMAN, C.J., and HOWE, and RUSSON, JJ., concur in DURHAM, J.'s, opinion. STEWART, Associate C.J., concurs in the result.