Lead Opinion
delivered the Opinion of the Court.
¶1 Citizens Awareness Network, Women’s Voices for the Environment, and Clark Fork Coalition (collectively, “Conservation Groups”) appeal the order of the District Court for the Twentieth Judicial District, Sanders County, denying their motion for summary judgment and upholding the decision of the Montana Board of Environmental Review (BER) that denied the Conservation Groups’ motion for leave to amend their administrative pleading in a contested case hearing over the Montana Department of Environmental Quality’s (DEQ) issuance of an air quality permit for a coal- and wood waste-fired power plant. We reverse and remand.
¶2 The sole issue on appeal is whether the District Court erred in upholding BER’s decision denying the Conservation Groups’ motion to amend their administrative pleading.
FACTUAL AND PROCEDURAL BACKGROUND
¶3 Thompson River Power LLC (TRP) owns a coal- and wood wastе-fired power plant (“Thompson River facility” or “facility”) in Thompson Falls, Montana, and pursuant to the Clean Air Act of Montana seeks an air quality permit in order to begin operations. An air quality permit will allow TRP to emit air contaminants from the facility into the atmosphere, but will require TRP to take certain steps to control air pollution. See §§ 75-2-103(3), (9), -211(2) to (3), MCA.
¶4 DEQ initially issued an air quality permit to TRP’s predecessor, Thompson River Co-Gen (TRC),
¶5 On September 3, 2006, the Conservation Groups challenged the modified air quality permit by requesting a contested case
¶6 In response to the Conservation Group’s challenge, DEQ sent written discovery to the Conservation Groups on November 22, 2006. Later in November, DEQ filed motions to dismiss a number of the Conservation Groups’ claims for failure to state a claim and for lack of subject matter jurisdiction. The hearing examiner eventually denied DEQ’s motions to dismiss.
¶7 Three months after filing their affidavit, on December 19, 2006, the Conservation Groups sought leave from the hearing examiner to amend their affidavit to add a claim that potential emissiоns from the Thompson Falls facility would qualify it as a “major stationary source.” Classification of the facility as a major stationary source would subject it to additional air pollution controls under prevention of significant deterioration (PSD) regulations. The Conservation Groups argued that leave to amend was proper under Rule 15, M. R. Civ. P., because their motion was not based on an improper motive, but arose from the “same nucleus of facts that gave rise to the original Affidavit”-DEQ’s issuance of the air quality permit to TRP.
¶8 TRP and DEQ opposed the Conservation Groups’ motion, arguing that the thirty-day limit in § 75-2-211(10), MCA, for filing an affidavit in support of a challenge to the issuance of an air quality permit had passed and therefore foreclosed the possibility of subsequent amendments. TRP and DEQ further argued that the Conservation Groups had not provided good cause for their proposed amendments and that the amendments would unnecessarily and inevitably prolong the proceeding, resulting in prejudice.
¶9 The hearing examiner, declining to adopt the reasoning of either party, denied the Conservation Groups leave to amend their affidavit on the basis of Rule 15(c), M. R. Civ. P. The hearing examiner reasoned that the Conservation Groups’ prior comments in the environmental review and permitting process, their petition for a contested hearing, and their original affidavit did not give notice to DEQ or TRP that the plant should be permitted as a major stationary source. The hearing examiner concluded, somewhat puzzlingly, that the Conservation Groups’ proposed amendments did not assert a new claim, but that, nevertheless, the amendments did not relаte back because they were based on different facts than those stated in the original affidavit. ¶10 Subsequently, the hearing examiner held a contested case hearing at which the parties presented evidence and argument. The hearing examiner then issued findings of fact, conclusions of law, and a proposed order resolving the matter. The Conservation Groups filed objections to the findings of fact, conclusions of law, and proposed order, including an objection to the hearing examiner’s denial of their motion to amend their original affidavit. TRP and DEQ opposed the Conservation Groups’ exceptions. BER adopted the hearing examiner’s ruling in its final order without addressing, and therefore impliedly upholding, the denial of the Conservation Groups’ motion to amend. Pursuant to the Montana Administrative Procedures Act (MAPA), § 2-4-702, MCA, the Conservation Groups sought judicial review of BER’s decision denying them leave to amend their affidavit.
¶11 In the District Court, the Conservation Groups contended that BER’s decision was arbitrary, capricious, an abuse of discretion, and otherwise unlawful. DEQ and TRP intervened. The Conservation Groups moved for summary judgment, which DEQ and TRP opposed. The District Court denied
¶12 The Conservation Groups timely appealed.
STANDARD OF REVIEW
¶13 We review a district court’s ruling on summary judgment de novo. Signal Perfection, Ltd. v. Rocky Mt. Bank - Billings,
¶14 Justice Cotter, in dissent, objects to our chosen standard of review, raising a number of important points to which we hasten
¶15 Second, Justice Cotter asserts that the Court mistakenly addresses the propriety of relation back under Rule 15(c), M. R. Civ. P., before addressing the propriety of amendment under Rule 15(a), M. R. Civ. P. Under the facts of this case, however, it would be illogical to address the propriety of amendment under Rule 15(a), M. R. Civ. P., before considering relation back under Rule 15(c), M. R. Civ. P. To explain why this is so, we must evaluate the steps of the hearing examiner’s argument that were not articulated, but were implicitly necessary.
¶16 Under Rule 15(a), M. R. Civ. P., a court may deny leave to amend if the proposed amended claims would, on their merits, be futile. Hobble-Diamond Cattle Co. v. Triangle Irrigation Co.,
¶17 For these reasons, we respectfully disagree with Justice Cotter that analysis of the propriety of granting leave to amend under Rule 15(a), M. R. Civ. P., must always precede the relation back analysis under Rule 15(c), M. R. Civ. P.
DISCUSSION
¶18 Whether the District Court erred in upholding BER’s decision denying the Conservation Groups’ motion to amend their administrative pleading.
¶19 Section 75-2-211(10), MCA, allows a party adversely affected by DEQ’s issuance of an air quality permit to seek a contested case hearing by filing a request for a hearing within fifteen days of DEQ’s decision to issue the permit and then, within thirty days of DEQ’s decision, filing an affidavit setting forth the grounds for seeking a hearing. Here, the Conservation Groups timely filed their hearing request and affidavit, but then, approximately three months after the expiration of the period for filing the affidavit, they sought leave to amend their affidavit to assert additional challenges to the air quality permit. The hearing examiner denied the Conservation Groups’ motion to amend on the basis of Rule 15(c), M. R. Civ. P., reasoning that the new claims that the Conservatiоn Groups sought to add were based on different facts than their original claims and thus did not relate back to the filing of the initial affidavit. The Conservation Groups appeal this ruling, contending that their motion was consistent with Rule 15(c), M. R. Civ. P., because their new claims arose, like their initial claims, out of the decision of DEQ to grant a modified air quality permit to TRP.
¶20 The procedures of MAPA govern a contested case hearing under § 75-2-211(10), MCA. MAPÁ, however, does not expressly address motions to amend pleadings. Here, the hearing examiner evaluated the Conservation Groups’ motion for leave to amend under Rule 15(c), M. R. Civ. P. The Montana Rules of Civil Procedure do not apply to administrative hearings, M. R. Civ. P. 1 (“These rules govern the procedure in
¶21 Rule 15(c), M. R. Civ. P., reads in relevant part, “Whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading.” When the conditions of Rule 15(c), M. R. Civ. P., are met, the amendment is not barred by the statute of limitations, see e.g. Sooy,
¶22 Once a suit is filed, “the defendant knows that the whole transaction described in it will be fully sifted, by amendment if need be, and that the form of the action or the relief prayed or the law relied on will not be confined to their first statement.” Barthel v. Stamm,
¶23 Here, the claims that the Conservation Groups sought to add arose from the same transaction or occurrence as the claims raised in their original affidavit; that is, the decision of DEQ to issue a modified air quality permit to TRP. It is this occurrence, the final agency action in issuing the permit, that triggers administrative and later
¶24 The hearing examiner, in denying the Conservation Groups leave to amend the affidavit, reasoned that neither DEQ nor TRP would have been on notice, based on the Conservation Groups’ original affidavit, that the Thompson River facility should be permitted as a major stationary source, and thus subject to PSD regulations. Specifically, the hearing examiner wrote:
In the analysis of whether the proposed amendments make more specific what has already been alleged, there are no allegations in the Notice of Appeal and Request for Hearing, the original Affidavit or the comments that address factors which would cause the Department or the Permittee to consider that the permittee should be permitted as a major stationary source. It is a leap to say that the Department or the permittee should have been on notice from the comments that at the TRC plant the actual heat input to the boiler would result in the potential to emit at levels greater than 250 tons per year of NOx and S02.
This reasoning is mistaken for a number of reasons. First, the hearing examiner did not expressly consider whеther the proposed amended claims arose from the same transaction or occurrence as the original claim, and to the degree that the hearing examiner implied that each discrete fact alleged in the original affidavit was a separate transaction and occurrence, the hearing examiner’s view was impermissibly narrow. Second, the hearing examiner was mistaken because the Conservation Groups’ original affidavit expressly revealed their contention, fully presented in their proposed amended affidavit, that the Thompson River facility should be subject to PSD regulations. In the original affidavit, the Conservation Groups. asserted that the issuance of the modified air quality permit was invalid because DEQ did not require TRP to comply with the best available control technоlogy (BACT) requirements of 42 U.S.C. § 7475(a)(4). Section 7475(a)(4), which is part of the PSD provisions of the Federal Clean Air Act (FCAA), requires BACT for “major emitting facilities.” The definition of a “major emitting facility” in 42 U.S.C. § 7479(1), which is also part of the PSD program of the FCAA, is
¶25 Finally, DEQ argues that § 75-2-211(10), MCA, not Rule 15(c), M. R. Civ. P., governs the Conservation Groups’ motion to amend. Section 75-2-211(10), MCA, provides that a party who is adversely affected by DEQ’s decision to approve an air quality permit and who seeks a contested hearing must file an “affidavit setting forth the grounds for the request... within 30 days after the department renders its decision.” DEQ contends that the thirty-day limit for filing an affidavit acts as an absolute bar against any subsequent amendment of the affidavit of an adversely affected party. DEQ’s proposed reading of § 75-2-211(10), MCA, conflicts with our reasoning in Simmons v. Mountain Bell,
¶26 The instant case is analogous to Simmons. Section 75-2-211(10), MCA, like § 49-2-501(4)(a), MCA, provides a time limitation for filing an administrative pleading. Here, the Conservation Groups, like the plaintiff in Simmons, filed their pleading (affidavit) within the applicable time period, but then sought to amend the affidavit after the time period had expired. Here, as in Simmons, the claims the Conservation Groups asserted via amendment arose from the same transaction or occurrence as the claims in the original affidavit that was timely filed. Consequently, here, as in Simmons, the Conservation Groups’ amended claims relate back to the time when they filed their original affidavit. Accordingly, we reject DEQ’s argument that § 75-2-211(10), MCA, bars the Conservation Groups from amending their original affidavit.
¶27 Justice Rice, in dissent, also contends that the thirty-day deadline in § 75-2-211(10), MCA, forecloses the possibility of any subsequent amendment and, therefore, that consideration ofRule 15, M. R. Civ. P., to allow amendments outside the thirty-day period is improper as a matter of law. In support of this position, Justice Rice notes our language from In re Estate of Spencer,
¶28 This reasoning, which would disallow any amendments after the initial thirty-day period for filing the initiating affidavit, goes too far. First, § 75-2-211(10), MCA, provides that hearings are to be governed by the contested case provisions of MAPA. While MAPA itself does not expressly address motions to amend, сourts and commentators alike agree that amendments to administrative pleadings are proper and that leave to amend should be no more onerous in administrative cases than in civil cases. See Yaffe Iron & Metal Co.,
¶29 Second, we do not believe that the requirement of § 75-2-211(10), MCA, that “[a]n affidavit setting forth the grounds for the request [of а contested case hearing] ... be filed within 30 days,” is a procedural requirement that is necessarily inconsistent with subsequent amendment. See In re Est. of Spencer, ¶ 13. For example, under the Montana Rules of Civil Procedure, a defendant has a deadline for filing a responsive pleading within twenty days of service of the summons and complaint. M. R. Civ. P. 12(a). This deadline for filing a pleading, however, does not preclude subsequent amendments to the initial pleading. M. R. Civ. P. 15(a).
¶30 Third, as a practical matter, in a contested case hearing, formal discovery will only occur after an adversely affected person files a request for a hearing and the affidavit setting forth the grounds for the requested hearing. This is particularly the case with regard to discovery of information from non-state actors, such as TRP here. In fact, in this case, DEQ filed its first discovery request two months after the Conservation Groups filed their affidavit. It would make little sense and would not foster resolution of contested cases on the merits to foreclose the possibility of amendments before significant discovery occurs, as Justice Rice’s proposed interpretation of § 75-2-211(10), MCA, would do.
¶31 While we agree with Justice Rice that parties should not be allowed to abuse procedural rules in order to obstruct the administrative process, we feel that the standard grounds for denying motions to amend (undue delay, bad faith, undue prejudice, repeated failure to cure deficiencies by previously allowed amendments, futility, etc.) are adequate to prevent abuse. E.g. Bitterroot Intl. Sys. Ltd. v. W. Star Trucks, Inc.,
¶32 All parties devote argument to whether the Conservation Groups’ proposed amendments would unduly delay completion of the hearing, сausing prejudice to DEQ and TRP. The hearing examiner expressly declined to address this issue in the order denying the Conservation Groups’ motion to amend. Nor did BER or the District Court address the issue of potential prejudice from any delay occasioned by the proposed amendment. In the absence of any ruling on this issue below, we decline to address this matter here. The parties may address the issue of delay on remand.
¶33 We reverse the decision of the District Court. We remand this matter to the District Court, and ultimately to BER, for further proceedings consistent with this opinion.
Notes
For the sake of simplicity, we will refer to the owner and operator of the Thompson River facility as “TRP” throughout.
Most of our opinions addressing Rule 15(c), M. R. Civ. P., do not discuss the appropriate standard of review. E.g. Brekkedahl v. McKittrick,
We conclude that the better standard of review of a district court’s determination of whether amended claims arise out of the same transaction or occurrence as the claims in an original pleading is de novo review. The Second Circuit Court of Appeals has articulated the rationale for such review:
[A] relation back decision under Rule 15(c)(2) does not involve an exercise of discretion. A court reviewing a Rule 15(c)(2) decision performs a function analogous to that performed by an appellate court reviewing a dismissal for failure to state a claim under Rule 12(b)(6). In reviewing a 12(b)(6) dismissal, we ask whether the facts provable under the allegations of the complaint would support a valid claim for relief; in reviewing a Rule 15(c)(2) relation back decision, we ask whether the facts provable under the amended complaint arose out of conduct alleged in the original complaint. If so, the amended complaint will relate back. Because appellate courts seem to be “in as good a position as the district court” to make tins decision, the standard of review under Rule 15(c)(2) should arguably be de novo ....
Slayton v. Am. Express Co.,
It would be illogical to conclude, as DEQ suggests, that its earlier decision in the permitting process to evaluate the Thompson River facility asa minor stationary source was the transaction or occurrence from which the Conservation Groups’ new claims arose. Such decision would then be insulated from review by § 75-2-211(10), MCA, Rule 17.8.1210(j), Admin. R. M., and the ripeness doctrine, see e.g. Quest Corp. v. Mont. Dept. of Pub. Serv. Reg.,
Dissenting Opinion
dissents.
¶34 I dissent from the Court’s decision to reverse the order denying the Conservation Groups’ motion for leave to amend their affidavit. In this connection, I dissent from the Court’s sua sponte decision to modify the standard of review applicable to orders entered pursuant to M. R. Civ. P. 15(с). I would continue to adhere to our precedent that orders granting or denying leave to amend pleadings should be reviewed for an abuse of discretion.
¶35 The Conservation Groups presented their appeal in these words: “The sole issue on this appeal is whether the BER abused its discretion by denying leave to amend on the grounds that the Conservation Groups’ proposed ‘major source’ claim did not arise out of the same ‘conduct, transaction, or occurrence’ as the original Affidavit.” The Conservation Groups stated that a decision to deny leave to amend pursuant to M. R. Civ.
¶36 In its response brief, DEQ cited our recent decision in Farmers Coop. Assn. v. Amsden, LLC,
¶37 At ¶ 13, footnote 2 of the Opinion, the Court engages in a somewhat lengthy analysis of what should be the standard of review under Rule 15(c), noting that few of our opinions discuss the appropriate standard of review with respect to this subpart of the Rule. This is where the Court goes off the tracks. The Court errs in cоnducting the Rule 15(c) analysis without first addressing, under Rule 15(a), the propriety of the hearing examiner’s decision to deny the amendment in the first instance. This approach ignores the threshold inquiry which invokes the hearing examiner’s discretion.
¶38 Rule 15(a) addresses the circumstances under which a party may amend its pleadings. Once a requisite amount of time has passed, the rule provides that a party’s pleading may be amended only by “leave of court or by written consent of the adverse party,” and that “leave shall be freely given when justice so requires.” The remaining subsections of the rule address “amendments to conform to the evidence,” “relation back of amendments,” and “supplemental pleadings.” Of particular interest here is Rule 15(c), which provides generally that whenever a claim or defense asserted in an amended pleading arises out of the “conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, the amendment relates back to the date of the original pleading.” This subsection of the rule requires a relation-back inquiry under those circumstances in which the amended pleading would otherwise be too late in time; it does not, however, displace the general rule set forth in Rule 15(a) that leave of court must be obtained for amendment of a pleading in the first instance. It is the “leave of court” which calls for an exercise of the district court’s discretion, or in this case the discretion of the hearing examiner. If the court grants leave to amend, then, in cases calling for the determination, the next inquiry is whether the amendment already allowed relаtes back to the date of the original pleading.
¶39 I now turn to the precedent which the Court’s decision seemingly overrules. In Lindey’s v. Professional Consultants, Inc.,
¶40 Later in the same year, we decided the case of Simmons v. Mountain Bell,
¶41 Most recently, we-addressed a plaintiffs appeal from a district court’s decision denying leave to amend its complaint to add an additional claim. In Farmers, we again announced the general rule that the decision to grant or deny a motion to amend lies within the discretion of the district court, and that we review such decisions to determinе whether the court abused its discretion. Farmers, ¶ 12..In addition, we again cited the multiple justifications a court might have for denying such a motion. We then addressed the specific claims presented by the plaintiff in its original complaint, the prejudice to the opposing party who operated for a year under the presumption that the original allegations were discrete, and the failure of the plaintiff to provide a sufficient reason for the late amendment. We concluded that several concerns expressed by the district court supported its decision to deny leave to amend the complaint. Farmers, ¶ 22.
¶42 Here, in similar fashion, the hearing examiner evaluated the status of the case as of the time that leave to amend was sought. The examiner concluded that the proposed amendment wоuld change the way the application would be processed, that DEQ did not have prior notice of the proposed revision, and further that the Conservation Groups did not aver that the amended affidavit was based upon newly acquired information that was not available at the time of the initial filing. In other words, the hearing examiner cited the multiple reasons the amendment should, in her discretion, be denied. Upon its review, the District Court concluded that it was evident from the hearing examiner’s order that issues such as delay and prejudice were also considered by her in arriving at her decision. The District Court concluded that the decision by the hearing examiner was not arbitrary or capricious, and that there was no abuse of discretion.
¶43 Thus, contrary to the Court’s assertion that futility was the basis for the hearing examiner’s “implicit reasoning,” I would find, as did the District Court, that the hearing examiner properly took account of several factors in rejecting leave to amend. Our well-reasoned precedent is clear: A court or hearing examiner is privileged to take account of multiple aspects of the case in deciding whether to exercise discretion in favor of or against an amendment. We err here, in my judgment, in jumping past this inquiry to an analysis of whether the facts provable under the amended complaint arose out of the conduct alleged in the original complaint, and in announcing a new standard of review applicable to this analysis. We should first look to whether the denial of the motion for leave to amend was an abuse of the hearing examiner’s or the court’s discretion, given the many fаctors taken into account by them in the first instance. It is this analysis which the hearing examiner conducted and which the District Court upheld. It is this analysis which invokes the hearing examiner’s discretion, exercised based upon her knowledge of the status of the case and the possible problems attendant to a proposed amendment.
¶44 In sum, I dissent from our revision of the standard of review of Rule 15 decisions, and consequently from the Court’s determination to reverse the decision of the District Court. Had the hearing examiner and the District Court determined the amendment should have been allowed, I would have affirmed this exercise of discretion; similarly, I would conclude that denial of the amendment was likewise within the discretion of the hearing examiner under the facts presented here.
¶45 I therefore dissent.
Dissenting Opinion
dissenting.
¶46 I agree with Justice Cotter’s thoughts with regard to the correct standard of review of abuse of discretion. I write separately because, in my view, the request for leave to amend in this case was improper as a matter of law and, thus, granting the request would have constituted an abuse of
¶47 The governing statute provides that “[a]n affidavit setting forth the grounds for the request must be filed within 30 days ....” Section 75-2-211(10), MCA (2005). The “grounds” set forth in the Conservation Groups’ affidavit pertained only to alleged errors within DEQ’s review of the permit for minor stationary emission sources. The affidavit did not assert that an entirely different permit process should be applied. Thus, because the Conservation Groups failed to set forth this new and different ground within 30 days as required by the statute, they were barred from amending their affidavit to include it. See § 75-2-211(10), MCA.
¶48 Rule 15(c), M. R. Civ. P., fails to save the day because the Legislature has not applied the Rules of Civil Procedure to this particular process, аs it has done for other statutory procedures. See e.g. § 49-2-204(2), MCA (“[T]he department shall adopt all applicable portions of the Montana Rules of Civil Procedure ....”). Thus, the Rules of Civil Procedure, as the Court recognizes, can at most provide “guidance.” Opinion, ¶ 20. What the Court fails to acknowledge, however, is that such guidance is only appropriate when the statute at issue does not specifically provide a different procedure. See In re Estate of Spencer,
¶49 The Court rejеcts this position, insisting that it “conflicts with our reasoning in Simmons v. Mountain Bell,
¶50 Adhering to the statute at issue here and prohibiting amendments raising new claims after the 30-day deadline would not, as the Court states, forbid all amendments. See Opinion, ¶ 28. Of course, prior to expiration of the 30-day deadline, any kind of amendment to the affidavit is permitted, even one setting forth entirely new grounds. See § 75-2-211(10), MCA. After the 30-day deadline, amendments which clarify or support claims timely filed would also be permissible. See § 75-2-211(10), MCA.
¶51 The Court also cites to Rule 12(a), M. R. Civ. P., to support its position, reasoning from this Rule that the deadline for an answer “does not preclude subsequent amendments” to an answer filed in District Court and neither should § 75-2-211(10), MCA. Opinion, ¶ 29. Even though, for the reasons discussed above, the Rules of Civil Procedure do not govern here, Rule 12(a) illustrates precisely why this Dissent is correct. Rule 12(a) provides that “[a] defendant shall serve an answer within 20 days after the service of the summons and complaint
¶52 The Court has reached its decision by looking to other rules, treatises discussing administrative law generally, and cases interpreting different statutes-everything • but the wording of the actual statute at issue. The Court thus fails to enforce the specific requirements within the statute and the Legislature’s desire to conduct а prompt proceeding. By such maneuvering, the Court has failed to heed the admonishment provided by the United States Supreme Court in cases such as this:
Indeed, administrative proceedings should not be a game or a forum to engage in unjustified obstructionism by making cryptic and obscure reference to matters that “ought to be” considered and then, after failing to do . more to bring the matter to the agency’s attention, seeking to have that agency determination vacated on the ground that the agency failed to consider matters “forcibly presented.”
Vermont Yankee Nuclear Power Corp. v. Nat. Resources Def. Council, Inc.,