FRIENDS OF THE WILD SWAN, a Montana Nonprofit Corporation, Plaintiff and Appellant, v. DEPARTMENT OF NATURAL RESOURCES AND CONSERVATION, and MONTANA BOARD OF LAND COMMISSIONERS, Defendants and Respondents.
No. 04-862
Supreme Court of Montana
December 29, 2005
2005 MT 351, 330 Mont. 186, 127 P.3d 394
For Respondents: Tommy Butler and Mark Phares, Special Assistant Attorneys General, Department of Natural Resources and Conservation, Helena.
JUSTICE RICE delivered the Opinion of the Court.
¶1 Appellant Friends of the Wild Swan appeals from the order of the First Judicial District Court granting summary judgment in favor of Respondents Department of Natural Resources and Conservation and the Board of Land Commissioners. We affirm.
¶2 We restate the issue on appeal as follows:
¶3 Does
BACKGROUND
¶4 In 2003, the Montana Department of Natural Resources and Conservation (DNRC) selected one of three alternatives set forth in a Final Environmental Impact Statement on logging in the Swan River State Forest. The selected alternative, “Alternative C,” proposed harvesting 10.2 million board feet in three phases from a parcel of school trust lands known today as the Goat Squeezer Project Area. The purpose of the harvest was to generate funds for the Montana public schools as well as to promote timber stand health and vigor. DNRC submitted the proposed timber harvest and sale to the Montana Board of Land Commissioners (Board) as required, and the Board approved the harvest and sale on July 21, 2003. In approving the proposal, the Board did not conduct a harvest-level accounting of the timber sale. Instead, the Board specifically evaluates costs and benefits at the programmatic, or year-end, level only.
¶5 Friends of the Wild Swan (FOWS), a nonprofit environmental group, challenged the Board‘s methodology in evaluating timber sale transactions in the District Court, arguing that
STANDARD OF REVIEW
¶6 In granting summary judgment, the District Court ruled as a matter of law that
DISCUSSION
¶7 The issue of whether
The Trust For Public Schools
¶8 Under the Act of February 22, 1889 (the Enabling Act), the federal government granted Montana certain lands “for the support of common schools.” Enabling Act, § 10. The grant of those lands created
¶9 Pursuant to the Montana Constitution, the Board of Land Commissioners is directed to administer the trust and act as the accountable trustee. See
In the exercise of these powers, the guiding principle is that these lands and funds are held in trust for the support of education and for the attainment of other worthy objects helpful to the wellbeing of the people of this state as provided in The Enabling Act. The board shall administer this trust to secure the largest measure of legitimate and reasonable advantage to the state.
Deference to the Board
¶10 Initially, we note that the law affords discretion to the Board in its administration of the school land trust. In State v. Babcock (1966), 147 Mont. 46, 51, 409 P.2d 808, 811, we explained that “[T]he State Board of Land Commissioners has considerable discretionary power .... If the ‘largest measure of legitimate and reasonable advantage’ from the use of state lands is to accrue to the state, then the State Land Board must, necessarily, have a large discretionary power.” We further explained that this power was “inherent in the general and discretionary powers conferred by the constitution, and necessary for the proper discharge of its duties ....” Babcock, 147 Mont. at 51, 409 P.2d at 811. Finally, we affirmed that discretion in Montanans for the Responsible Use of the School Trust v. Darkenwald, 2005 MT 190, 328 Mont. 105, 119 P.3d 27 (Montrust II), where, when faced with an evaluation of the Board‘s method of determining “fair market value,” we stated, “we will not ‘control the discretion of the board unless it
¶11 In addition to the discretion granted to the Board as the administrator of the trust, the law entitles the Board, as a state agency, to “respectful consideration” of its “long and continued course of consistent interpretation” of
Does § 77-1-202, MCA , require the Board to conduct a harvest-level accounting when considering timber sales on school trust lands?
¶12 FOWS argues that in order to fulfill the obligations under
¶13 As a matter of statutory interpretation, our goal is to ascertain the intent of the Legislature. McCormick v. Brevig, 2004 MT 179, ¶ 40, 322 Mont. 112, ¶ 40, 96 P.3d 697, ¶ 40; see also
¶14 First, we observe that the plain language of the statute, set forth above, does not require such accountings. In fact, the statute on its face requires no accountings at all. Instead, the statute simply requires the Board to “secure the largest measure of legitimate and reasonable advantage to the state.”
¶15 However, FOWS argues that, despite the absence of an explicit requirement in the statute, we should reach a conclusion that the Board can fulfill its obligation to secure the largest measure of benefit to the state with regard to proposed timber sales only by conducting an accounting of all costs and benefits at the harvest level. FOWS reasons that a “comprehensive economic evaluation” is “implicit in the plain language of the statute,” particularly when the Board‘s fiduciary role with regard to school trust lands is considered.
¶16 FOWS‘s reference to the purposes which the Board must serve is not inappropriate. “We have many times stated that statutes must be read and considered in their entirety and the legislative intent may not be gained from the wording of any particular section or sentence, but only from a consideration of the whole.” State v. Heath, 2004 MT 126, ¶ 27, 321 Mont. 280, ¶ 27, 90 P.3d 426, ¶ 27 (citing Home Bldg. & Loan Ass‘n of Helena v. Fulton (1962), 141 Mont. 113, 115, 375 P.2d 312, 313). We are to give effect to all statutory provisions within a statutory scheme.
¶17 While
¶18 In light of the explicit accounting directives set forth in these statutes, we are hard pressed to conclude that the Legislature somehow meant to imply a more specific accounting requirement within
¶19 FOWS asserts that these other statutory accounting requirements are insufficient because they do not require the costs of individual sales, here the Goat Squeezer sale, to be calculated. It argues that, if the Board‘s “economic analysis is flawed or incomplete,” the Board cannot demonstrate that it is securing the largest measure of legitimate and reasonable advantage.
¶20 This argument erroneously assumes that the “legitimate and reasonable advantage” which the Board must pursue is exclusively an economic one. While financial return is, without question, a vital purpose, it is not the Board‘s only goal. The law recognizes the unique nature of the Board‘s obligation to manage the school trust lands. Land trusts require maintenance efforts to ensure long-term sustainability, and the Board is thus forced to make “difficult to account for” decisions aimed at (1) ensuring long-term sustainability of school trust lands, while also (2) providing adequate resources to present beneficiaries. See Babcock, 147 Mont. at 53-54, 409 P.2d at 811; see also
¶21 Further in this regard,
¶22 We concede that additional information and analysis is always possible, and may very well be advantageous. Certainly, a limb by limb, tree by tree, or acre by acre accounting is theoretically possible in the context of a timber sale, and undoubtedly such accountings would help the Board in its evaluation of proposed timber sales. Indeed, one could envision many things which could be read into the language of “secure the largest benefit” that would aid in the performance of the Board‘s duties. Of course, at some level, additional analysis would probably be prohibitively expensive and counterproductive. The point, however, is that it is not the duty of this Court to decide what accounting measures would best serve the Board in the fulfillment of its obligations. Those are matters for the Board and the Legislature.
¶23 Given the lack of evidence to the contrary, we cannot conclude that the Board, in view of the multiple purposes it must fulfill with regard to school trust lands, the deference which the law provides in its administration of school trust lands, and current statutory accounting requirements, has not or cannot secure the largest measure of benefit without a harvest-level accounting of timber sales. Consequently, we conclude that such a requirement is not implicit within
Strict Accountability
¶24 Finally, we address FOWS‘s brief argument that harvest-level accounting is required under
Strict accountability. The legislature shall by law insure strict accountability of all revenue received and money spent by the state and counties, cities, towns, and all other local governmental entities.
¶25 Interpreting this provision, we have stated that “[t]he Constitution indicates that the strict accountability function is not self-executing.” Reep v. Board of County Commissioners (1981), 191 Mont. 162, 169, 622 P.2d 685, 689. The provision directs the legislature to implement the provision “by law,” and, as such, it is up to the Legislature to create the statutory means which ensure “strict accountability.” In Reep, the Legislature, in the context of county government audits, required the Department of Community Affairs to
¶26 Here, the Legislature responded to the need for strict accountability by enacting,
¶27 FOWS does not argue that these statutes are unconstitutional for failing to ensure “strict accountability.” Instead, it appears to argue that
Conclusion
¶28 As the United States Supreme Court noted in Chevron U.S.A. v. N.R.D.C. (1984), 467 U.S. 837, 865, 104 S.Ct. 2779, 2793, 81 L.Ed.2d 694, 717, “judges are not experts in the field, and are not part of either political branch of the Government. Courts must, in some cases, reconcile competing political interests, but not on the basis of the judges’ personal policy preferences.” It may be easy to second-guess the Board‘s approach of conducting programmatic review of timber sales and the Legislature‘s two-time rejection of bills requiring harvest-level accounting of timber sales. However, the question here is not whether more specific accounting is preferable or even desirable. Rather, the question is whether harvest-level accounting of proposed timber sales is required by law. After review of the Enabling Act, the Montana Constitution, and the statutory scheme, we conclude that the Board is
¶29 Affirmed.
CHIEF JUSTICE GRAY, JUSTICES WARNER and MORRIS concur.
JUSTICE MORRIS concurs.
¶30 I concur in the conclusion reached by Judge Sherlock and this Court on appeal that nothing in the plain language of
¶31 As the Court points out in ¶ 22, many things could be read into the language of “secure the largest benefit” of
¶32 The Legislature also retains the ability to impose reasonable constraints upon the Board‘s discretion that the Board cannot ignore in carrying out its trust responsibilities. Montrust II, ¶ 61. For example, in Skyline Sportsmen v. Bd. of Land Com‘rs (1997), 286 Mont. 108, 114, 951 P.2d 29, 32, in the context of a proposed exchange of school trust land, we held that “neither the Board‘s fiduciary duty to the trust beneficiaries nor ... other factors” relieves the Board of its constitutional obligation to follow the “regulations and restrictions” imposed by the Legislature. We recognize that some legislative decisions may cabin the Board‘s discretion in managing state trust lands in the short term, but these same decisions also may help the Board “secure the largest benefit” in the long run. These reasonable legislative regulations include various environmental and land-use restrictions. Montrust II, ¶ 57.
¶33 Thus, as the Court correctly concludes today, nothing in the language of
JUSTICE LEAPHART dissenting.
¶34 The Majority astutely observes that “we cannot conclude that the Board ... has not ... secure[d] the largest measure of benefit without a harvest-level accounting of timber sales.” ¶ 23. Nor can we, I submit, conclude that the Board has fulfilled this statutory mandate absent such accounting. This is the precise reason why
¶35 Aside from its financial contributions to (or incremental depletions of) the School Trust, it is clear that every timber sale will have environmental, ecological and silvicultural effects, both positive and negative. The State assures us that the Goat Squeezer sale will have the beneficial effects of promoting timber stand health and vigor by removing trees at risk of infection and will promote regeneration of shade intolerant plant species. The harvest may even increase the rate of growth of decadent portions of the stand. On the other hand, the road construction necessary to complete the sale will likely contribute to erosion and sedimentation of streams, the harvesting of trees will reduce the winter range available to white-tailed deer, and may eliminate those decadent portions of the stand which prove vital to maintaining varied ecological niches capable of sustaining diverse biota. These effects, both positive and negative, should all play into the Board‘s calculus in making its determination whether to proceed with the sale. Unlike the pecuniary implications of the sale, however, it makes no sense whatsoever to aggregate these effects in a “programmatic analysis” of all sales completed during a year. The economic, ecological and silvicultural effects of a timber harvest are inherently local. Aggregating these effects across several sales would render consideration of them utterly meaningless. An improvement in white-tailed deer‘s winter habitat in the Elkhorn Mountains will do nothing to offset the potentially deleterious effects of the Goat Squeezer sale on the winter habitat of white-tailed deer who live in the vicinity of Swan Lake. Stream sedimentation caused by roads constructed for the Goat Squeezer sale will not be mitigated by the closure of a road in the Gallatin Canyon. Aggregating these effects forces the Board to compare apples to oranges. More importantly, it precludes the Board making informed decisions whether to proceed with any particular management decision.
¶36 Accounting on a per-sale basis not only facilitates rational management decisions today, it enables the Board to make far better decisions concerning future resource allocations and land management decisions-it promotes sustainability. All land is not created equal. Because of varying sun exposure, soil fertility-nutrient richness, moisture retention, aeration, etc.-exposure to the elements, and other variables, certain lands are better suited to growing trees for harvest than others. Because of these attributes, certain stands of forest will require more expensive, intensive management (such as pre-harvest thinning) in order to produce commercially viable timber. Although past success is not a perfect predictor of future performance, it is one
¶37 The Legislature has told us that the Board has a duty to “secure the largest measure of legitimate and reasonable advantage to the state.”
¶38 The Majority points us to two statutory provisions that purportedly “illuminate the legislative intent regarding the Board‘s accounting obligations.” ¶ 17. These provisions, however, say very little about the Board‘s duties of accounting, instead detailing the Board‘s duty to transmit reports to beneficiaries.
¶39 The majority relies primarily on two prior cases interpreting the statutory command to the Board to “secure the largest measure of legitimate and reasonable advantage to the state“-State ex rel. Thompson v. Babcock (1966), 147 Mont. 46, 409 P.2d 808, and Montrust II-both of which are easily distinguishable from the present controversy. In Babcock, we indicated that in order to fulfill its statutory mandate, which we described as “the principal restriction on the power of the Board,” 147 Mont. at 52, 409 P.2d at 811, the Board must have “a large discretionary power.” Babcock, 147 Mont. at 51, 409 P.2d at 811. In Babcock, we allowed the Board to knowingly accept less than the highest bid for the lease of agricultural lands because the interest in having a lessee who would be a good steward and not abandon the lease was deemed worthy of consideration. Babcock, 147 Mont. at 49, 52-53, 409 P.2d at 811. Unlike the present controversy, the Board was well informed about the return it was receiving, but chose to receive less than the maximum financial return based on non-pecuniary benefits. Here, in contrast, the Board has no sense of the return it is receiving on the Goat Squeezer sale. If the Board knew it were selling assets at a loss, it could conceivably provide an acceptable
¶40 In Montrust II, this Court affirmed the Board‘s decision to sell a future stream of mineral royalties and approved the Board‘s method for determining the present full market value of that future stream of income. Montrust II, ¶¶ 32, 64. The plaintiffs challenged the discount rate that the Board utilized in calculating the present value of the future stream of revenue. Both sides presented expert testimony regarding the discount rate and members of the Board testified that they had considered various discount rates before eventually selecting one. Montrust II, ¶¶ 45-46. We declined to ” ‘control the discretion of the board’ ” in its selection of a discount rate and consequent calculation of full market value. Montrust II, ¶ 52 (citation omitted). Nevertheless, the Board did prospectively consider its options before selecting a discount rate and calculating the present full market value of the specific assets sold. In stark contrast to the present case, the Board did not dispose of trust assets without bothering to consider whether it was receiving a fair return (or generating any revenue at all).
¶41 Finally, to the extent that the Court‘s decision in Montrust II hinged on the “Board‘s discretionary authority ... in order to effectuate sustained yield concepts and ensure the long-term strength of the trust corpus,” ¶ 56, this consideration counsels against allowing the Board to proceed with timber sales under a veil of ignorance. Trees are a classic example of a renewable resource: timber can be harvested from the same land in a perpetual cycle. Growing trees for harvest, however, requires a considerable outlay of resources throughout the growth cycle. Moreover, not all land is equally fertile and conducive to silviculture. Therefore, a manager who seeks to maximize the generative capacity and income from her land should track expenditures and returns in order to rationally allocate land to its optimal uses in the future. Without doing so, it is impossible for a manager to plan so as to “secure the largest measure of legitimate and reasonable advantage” from her lands.
¶42 I dissent.
JUSTICE COTTER joins in the dissent of JUSTICE LEAPHART.
JUSTICE NELSON dissents.
¶43 It has been a tough year for the School Trust. First, we upheld a legislative scheme that robs the Trust of resources for future school children in the name of current tax relief (Montanans for the Responsible Use of the School Trust v. Darkenwald, 2005 MT 190,
¶44 Now we are told by the majority at ¶ 10 of this Opinion that while the Board of Land Commissioners (the Board) does not have “unfettered discretion” in determining “fair market value,” we will not find an abuse of that discretion unless the Board‘s action is, “in effect, fraudulent.” What a lofty standard to set for our elected trustees in their management of the lands committed under our Constitution and Enabling Act to the education of Montana‘s children! And, what a contrast with the standard we articulated in State v. Babcock (1966), 147 Mont. 46, 54, 409 P.2d 808, 812 (the State Board of Land Commissioners “owe[s] a higher duty to the public than does an ordinary businessman“). Now the standard is: “Do what you want; just don‘t do something that involves bad faith, dishonesty or moral turpitude.” See Blacks Law Dictionary 672 (7th ed. 1999). Now, absent being able to prove outright theft, graft or corruption, no future litigant such as Friends of the Wild Swan (FOWS) or Montrust will have a chance in litigation seeking to protect the Trust from mismanagement and waste by the Board.
¶45 Obviously, with the abuse of discretion bar set at ground level, pretty much anything the Board chooses to do under
¶46 I agree with FOWS‘s argument and analysis, the majority‘s primer on statutory construction notwithstanding.
¶47 Even common sense dictates that one cannot secure the largest
¶48 The majority‘s attempt to “illuminate [] legislative intent” in the provisions of
¶49 The majority‘s reliance on these general statutes ignores the Board‘s fiduciary responsibility with respect to state trust lands. What we stated in Montanans for the Responsible Use of the School Trust v. Board of Land Commissioners, 1999 MT 263, ¶ 14, 296 Mont. 402, ¶ 14, 989 P.2d 800, ¶ 14 (Montrust I), bears repeating here:
The State of Montana is a trustee of those lands (hereafter, the school trust lands). See, e.g., Toomey v. State Board of Land Com‘rs (1938), 106 Mont. 547, 559, 81 P.2d 407, 414; State v. Stewart (1913), 48 Mont. 347, 349, 137 P. 854, 855. Further, “The state board of land commissioners, as the instrumentality created to administer that trust, is bound, upon principles that are elementary, to so administer it as to secure the largest measure of legitimate advantage to the beneficiary of it.” Stewart, 48 Mont. at 349-50, 137 P. at 855. The State Board of Land Commissioners (hereafter, the Board) “owe[s] a higher duty to the public than does an ordinary businessman.” State v. Babcock (1966), 147 Mont. 46, 54, 409 P.2d 808, 812.
Whether the Board‘s fiduciary obligations-its higher duty to the
¶50 Furthermore, the majority‘s rationale-primarily focusing on legislative accounting requirements (or more properly, the lack thereof)-is not bolstered by its discussion of the Board‘s duties as regards forest management practices and non-economic considerations. Despite what this Court did to minimize the Board‘s fiduciary obligations in Montrust II, those trustee obligations, created under the Enabling Act and codified at
¶51 Additionally, the majority never explains how exactly forest management practices and non-economic considerations would be harmed by the Board accounting for individual harvests. If anything, those practices and considerations would be enhanced because of the Board‘s more detailed knowledge of the legitimate and reasonable advantages of each sale along with the associated costs. Justice Leaphart‘s dissent drives this point home.
¶52 Here, FOWS challenged the Goat Squeezer sale, not the annual timber harvest program for all state trust lands. The undisputed fact is that the Board does not know the costs or benefits of this sale in order to make an informed decision as to whether the sale‘s projected revenue warrants approval. Program-level accounting does not answer this question and, more importantly, does not obviate the Board‘s fiduciary obligation to realize the largest measure of advantage in each individual disposition of trust assets.
¶53 In summary, the record reflects that the Goat Squeezer sale will incur an estimated $750,400.00 in “expenditures” for the chosen action, Alternative C. The record also reflects that stumpage values, an
¶54 Interestingly, the United States Forest Service accounts for costs and revenues of each individual timber sale on federal holdings in Montana, so it cannot be that difficult an endeavor. Private businesses throughout this country utilize cost accounting as part of their cost-benefit analysis; yet, seemingly, the Board and the State of Montana lack this elemental accounting capability with respect to timber sales from School Trust lands.
¶55 The Board is not complying with
¶56 I dissent.