Montana Power Co. v. Public Service Commission

COMPANY, POWER MONTANA corp., Mont. PUBLIC SERVICE Appellant, v. Plaintiff agency COMMISSION, Montana, as an State Respondent. Defendant No. 82-340. May

Submitted 1983. Decided Oct. 1983. 671 P.2d 604. Gough, Shanahan, Waterman, & Johnson Ronald Water- argued, plaintiff appellant. Helena, man EileenShoreargued,Helena,fordefendantand respondent. Greely, Atty. Gen., Helena, Mellor, Mike III H. William (Mountain Legal F. Constance Brooks States Founda- tion), Denver, Colo., for amicus curiae. opinion

MR. JUSTICE WEBER delivered the Court. (Montana Power) Company appeals

Montana Power from District, an order of the District Court of the First Judicial County. Lewis and Clark The District Court order denied application prohibition Montana Power’s for a writ of part affirmed in an order of the Public Service Commission (Commission), prohibited pro- which Montana Power ceeding proposed corporate reorganization. with a We re- verse the order of the District Court. presented appeal

The issues on are: summarily 1. Can Commission act without notice or prohibiting proceeding Montana Power from holding company with while the the establishment of a investigates proposed reorganization? prohibit 2. Does Commission have the estab- holding company by during of a lishment Montana Power investigation by the Commission? 3. Does the matter disapprove proposed approve reorganization? proposed Montana Power has the formation of a new cor- poration, Energy Company, reorganiza- Montana and the accomplished by of Montana Power to be a reverse tri- tion Upon completion merger, angular merger. Montana Company Energy would become the sole shareholder of sharehold- common stock of Montana Power. common of Mon- ers of Montana Power would become shareholders Company through exchange. Energy a share-for-share tana Following merger, Power would become a direct Montana subsidiary Energy Company. of Montana February 23, 1982, Directors of Montana

On the Board of plan present reorganization Power voted to May. meeting On the follow- shareholders at the annual explained day, February ing 24, 1982, Power proposed reorganization Commission and advised sought approval on would be Commission that shareholder May 4, 1982. investiga- 1,1982, instituted an

On March prohib- plan reorganization and issued an order tion of the plan implementing iting until the Montana Power from provided: investigation completed. was The order prehearing confer- Commission staff shall hold a “1. The previously place to be noticed ence at a time and public through legal advertisements. prehearing shall, conference review

“2. staff at the persons, In- in order. issues set out this with interested persons may propose terested additions or deletions suggest procedures issues, those as well as to be in followed this Docket.

“3. propose The Commission staff shall to the Commis- following sion, prehearing procedures conference, the be followed and issues not set out this Order to be considered in this Docket.

“4. The Commission pub- staff shall schedule and notice a lic to allow this testimony Commission to take public concerning receive comments issues raised in this Docket. Company prohibited “5. The Montana Power tak- ing any steps preparing advancing es- further for holding company except tablishment for those actions might necessary address issues raised in this preparation

Docket, such testimony. copy “6. A of this order shall be mailed to the Montana Company, Power the Montana Consumer Counsel and all intervening parties (em- in Docket Nos. 80.4.2 and 81.6.57.” phasis added)

The Commission issued this order without notice or hear- ing, any opportunity appearance without for Mon- specified tana Power. completion No deadline was investigation. prescribed No termination date was prohibiting the order action Montana Power. Following attempt jurisdic- unsuccessful to invoke the tion Court, of this complaint Montana Power filed a in Dis- April seeking trict Court prohibition on ofwrit injunction grounds stay on the that the Commission’s or- der was issued absent matter and ab- prelimi- enjoin. sent The District Court issued a nary allowing shareholder vote on the reorganization plan. enjoined imple- However, the court plan (10) days entry mentation until “ten after of an appropriate judgment.” ap- The shareholders voted and proved reorganization plan May at the 1982 sharehold- meeting. ers’ subsequent participate at the to refused

The Commission pre- hearing. to chose not counsel Commission show cause Power Montana the three or to cross-examine evidence sent pro- possible of the effects to witnesses, the who testified explained to the reorganization. posed participate the because refused that District Court jurisdiction subject matter question Commission’s of the pending before reorganization proposed was still over argued testi- that also The Commission Commission. the mony by Mon- required raised the issues because not was by stat- questions resolved law to of involved tana Power for submitted utory interpretation. result, the evidence As a lim- is this Court and Court District consideration testimony for witnesses of the the uncontradicted ited Power. Montana summarily notice without act Can proceeding prohibiting

hearing Power company holding while of a establishment with the reorganization? proposed investigates protection equal of guarantees Constitution The Montana Const, II, persons. art process Mont. all due the laws and of Montana persons State within All found §§ 4 & 17. corpora courts; of to the are “person.” 4A & Rules of the definition tions are included ‘person’ 4B(1), corporation within a “A is Mont.R.Civ.P. equal protection Four process clauses the due States, Mt. U. S. Constitution.” to the teenth Amendment (Mont.1981), Reg. 634 P.2d Dept. Serv. v. Pub. Etc. St.Rep. 1479, 1487. 188, 38 issuing summarily by an order power act to by utility a drastic a prohibiting without a action protection required only implied power where to be Freedman, Professor public. 0. James As noted Pennsylvania: University Law, summarily sensi- power drastic is a act “. . . The injunctive one, power tive akin to the court; it is granted agencies, usually having those the confidence of legislature, only performance of a limited num- political ber process tasks. Given the which adminis- agencies brought trative are to birth drastic nature power summarily, justifiable to act it is to assume legislature’s delegate summary authority failure to arguments was not inadvertent. Whatever can be made in implying agency particular existence in an favor of expressly precisely not delegated, they are not appropriate summarily. to act any

“Moreover, assertion of summarily to act potentially presents questions of dimension, constitutional particularly respect with summary to the limitations action may impose right hearing. By enforcing to a a re quirement statutory of authorization, courts insure that they will questions only confront these legislature when the upon has focused policy them as a matter and has unam biguously present elected to Summary them.” J. Freedman, by Agencies, Action University Administrative of Chi cago (1972) Law (emphasis added). Review at 5-6 summary power expressly granted, When a it is or dinarily limited to public situations where the risks avoided by summary outweigh action legal the intrusions rights normally which would follow. Even in cases where a expressly grants statute summary action, con rights protected. stitutional still must be Here the Commission acted without notice and without an opportunity hearing part on of Montana Power. type procedure That striking inis contrast to the notice hearing procedures required and in the district courts when restraining preliminary injunctions orders, permanent and injunctions sought are Chapter under 27, 19, Title MCA. 69-3-110(5), specifies: .Section MCA “In addition to chap- other remedies this prevention ter punishment any violation of provisions thereof all commission, orders provisions of compliance compel may with commission by pro- chapter of the commission orders of the this civil by injunction, other mandamus, ceedings in remedies.” legislative the Com- intent the clear shows section

This by in- system enforcement to seek court use the mission type injunctive issuing distinguished junction, protect part. constitutional Procedures on its own order 27, Title rights are mandated notice injunctive or- governs Chapter issuance 19, MCA, which by the courts. ders leg- utility that the public discloses law review

Our topic which with specifically addressed has not islature Chapter reorganization. corporate involved, i.e. here we are utilities, does not covering regulation of 69, of Title regarding requirements no- procedural any specific contain any provision in the Ad- hearing. we find do Neither tice Com- which authorizes Rules ministrative summary notice and without to make mission hearing. opportunity for a Chapter MCA, enti- Title also reviewed

haveWe any legisla- Chapter contain “Injunctions.” not 19 does tled reorganiza- corporate applying specifically provision tive 27-19-203, isMCA By analogy, however, section tions. proceed- adjudicatory applies That section assistance. relating investigation Commission ing or formal interruption It authorizes of service. continuation prohibiting restraining order a to enter court district complained until the acting parties manner in legislature Thus, the its decision. has rendered during restraining order, of a for issuance proof requiring on investigation, pendency without of an granting prior to the case the entire merits present where the comparable case This is order. re- be must Power that Montana concluded pending ratepayers its protection strained investigation. pertains While injunctions 27-19-201, MCA, section during litigation, (3) the course of subsection allows an in- junction appears party when it that the adverse threatens to do some act which judgment will tend to render the inef- legislative fectual. This might injunction indicates intent that an comparable issued pre- fact situation case, sent where the per- Commission has contended that mitting reorganize Montana Power to would render the Commission’s final determination ineffective.

In case, this conference was conducted the Commis- sioners on their own motion without notice to Montana initiating Power. The investigation of the extent of the Commission’s and the ramifications of proposed reorganization was issued on March 1, 1982. provisions The order contained prehearing as to a confer- procedures ence, during investigation, public hearing. and a Montana Power any was steps ordered not to take in ad- vancing reorganization plan. prohi- The duration of this specified bition was not in the order. Counsel informed this during argument Court oral that the Commission’s investi- gation completed had not been and no date had been set the Commission for its final decision. The restraint on Montana year Power has been in effect for over a and a response half. The questioning the Commission to re- garding the challenge restraint was Montana Power to damages show that Appar- had resulted from the restraint. ently the Commission does not feel constitutional rights of infringed. Montana Power have been

Having found no in either the Montana Code Annotated or the sup- Administrative Rules of port of the Commission’s issue, without notice or hearing, prohibiting an order certain conduct for an indefi- period, nite we look to case law. This is an issue of first impression in Montana.

As Justice procedure observed, Frankfurter fairness of process” primary “due in the sense. process

“Due is not a mechanical instrument. It is not a 368 adjust- of process delicate a It is process. It is

yardstick. judgment exercise involving the inescapably ment unfolding with entrusted the Constitution whom those process. of the

<< ad- has been interest that precise nature . . The

“. done, this was in which affected, manner versely the proce- alternatives it, available doing reasons in the office implicit followed, protection was that dure challenged, balance is functionary conduct whose - are these accomplished good complained hurt judicial enter into must that the considerations some (1951), 341 McGrath v. Committee Anti-Fascist judgment.” (Frank- 817, 849 624, 644, L.Ed. 95 123, 163, 71 S.Ct. U.S. J., furter, concurring). is the process of due requirement fundamental

“The in a time and meaningful ‘at a be heard opportunity ” (1976), 424 Eldridge v. Mathews meaningful manner.’ 32, 18, citing 902, 893, 47 L.Ed.2d 333, 319, 96 S.Ct. U.S. 552, 85 S.Ct. 545, Manzo, (1965), U.S. Armstrong v. be reasona must The notice 62, 65. 1190, 14 1187, L.Ed.2d may which proceedings parties inform calculated bly inter protected legally their affect adversely directly and 115, 112, (1956), U.S. City v. Hutchinson ests. Walker 178, 182. 1 L.Ed.2d S.Ct. 77k con exempt from not are agencies Administrative ago Long requirements. process of due restraints stitutional pro due that recognized Court Supreme States United asser on an based compromised cannot protections cess necessary. was expediency that tion broad with invested been commissions “Regulatory by law. them assigned duty sphere within the ex- informed their proceedings quasi-judicial Even deference proper and receives éxacts judgment pert submission due with been reached when it courts they do within Indeed, much restraints. constitutional su- exempt from is discretion administrative realm pervision if obeyed. those restraints have been All the more need, insistent when has been bestowed so freely, safeguard’ that the open ‘inexorable of a fair and hearing be integrity. right maintained to such a hearing is one of play’ ‘the rudiments of fair assured to every litigant by the Fourteenth Amendment as a minimal requirement. compromise There can be footing no on the expediency, convenience or or because a natural desire to harassing delay, be rid of requirement when that minimal neglected ignored.” has been Ohio Bell Tel. Co. v. (1937), Comm’n. 301 U.S. 304-05, 57 724, 730-31, S.Ct. (citations omitted). 81 L.Ed. 1101-02 process rights Due involving public in an utility action a commission were considered in Southwest. Bell Tel. Co. v. Public (Tex.Civ.App.1981), Util. Com’n 618 S.W.2d 130. Utility The Texas Public summary Commission issued a or- der, hearing, without ordering utility company a to cease conducting experiment a pending certain evidentiary hearing on whether pro- the Commission had to experiment. hibit the preparation In experiment, utility the had notified the plan, Commission of its ex- pended large money amounts of employees. and transferred As is the here, case summary the Commission’s order was challenged utility when the injunctive filed an action for re- declaratory judgment lief and ground on the that the Com- mission lacked summary to issue the order. On appeal, appellate the court reversed the trial court and held legislature that given the not power by had implication prior enter, hearing, pro- without orders that by public hibit utility. conduct: The Court noted that the entire tenor of the Texas Administrative Procedure Act any power was antithetical in the Commission to issue summary substantially legal orders rights affect duties. grant

“The ordinarily of such limited to situa- public tions by summary where the risks avoided action outweigh the unconstitutional invasions that would nor- exists, the justification mally such when Even follow. prior ad- summarily and without power to act clearly given expressly directly, judication must be Bell, S.W. agency.” Southwest. Legislature to the the at 134. 2d appealed Texas Utility note that

We being ad the case Supreme Court, dismissed which appel cite moot. We become had cause vised that similarity instant for its factual court’s decision late Supreme Texas analysis. legal note that We case appellate lower court’s the trial both vacated Court cause regard merits of opinions “without court’s of civil opinion of the court expressed views or appeals.” Co. Tel. Bell Southwest. v. Com’n Util. Public (Tex.1981), 316. S.W.2d to situa- summary limited summary power should grant of by the public to be avoided risk where

tions placed constitutional the on outweighs limitation the action problem. The time no parties. was Here there rights the of Protec- 1, 1982. March was dated Commission the step reor- in the against next any, the needed tion, was if approval vote stockholders’ process, the ganization suffi- than more May had 4. The for scheduled Other so. to do chosen proceed had it court to time cient protective action, Commis- the need the claimed than disregard explain its justification no advanced sion has utility. rights process of the due McGrath, the by Frankfurter pointed Justice out As involving process yardstick delicate a but process a is not balancing requires of the judgment, a which exercise accomplished. Com good complained of and hurt which hurt a completely to demonstrate failed has mission regard part summary without requires on its action Power rights process due constitutional Company. regulation, adminis statute, no found haveWe the Com to conclude which case rule or trative where, in the protections process may suspend due mission

371 opinion doing public Commission, so would be in the interest.

We hold that under the facts of this case the Commis disregarded process rights sion the due of Montana Power issuing summary hearing. order without notice or prohibit Does the Commission have the estab- holding company by during lishment of a Montana Power investigation by the Commission? general, property public In devoted to use or to use public in which the has an interest can be controlled public good. for the common State ex rel. Mt. States &T. (1972), T. Co. v. District Court 443, 447, 160 Mont. 503 public regulated by 526, Montana, P.2d 529. In utilities are through pow the Public Service Commission the exercise of granted by Legislature. ers “[T]he Commission is a being pow of, to, creature owes its clothed with such clearly ers as are conferred statute.” Great (1930), Northern Utilities Co. v. Public Service Com’n. 180, 203, 294, Mont. 293 P. 298. The Commission has no powers. City inherent common law Polson v. Public Ser (1970), vice 155 Mont. 473 P.2d 508. only powers, “It limited to be ascertained reference creating it, statute reasonable doubt as grant particular power against resolved, will be power. Compa- existence Collier on Public Service (1921), Boyle nies, 404-405.” State 97, 102, v. 62 Mont. added). (emphasis P. 69-1-102, MCA,

Section defines the role of Commission: public hereby

“A created, service commission is whose duty supervise regulate operations public isit to and supervision regulation . utilities . . Such and in shall be conformity with this title.”

Legislative supervise regu- intent that the Commission public conformity late in utilities with Title 69 is reiterated 69-3-102, MCA: in section power hereby of su- full is invested with

“The commission public utilities, pervision, regulation, control of such chapter provisions . . of this to regulation power supervision, and control While full legislature granted Commission, is utilities powers. judicial power provided not include this does that 69-3-103(1), provides: MCA., Section pre- procedure hereinafter to modes of “In addition cases, particular said com- cases and classes scribed procedure power prescribe rules of to shall have mission necessary things exer- in the and convenient all do chapter upon powers the com- conferred this cise chapter nothing con- shall in this mission; “ vesting . judicial . . on said commission strued added). (emphasis enjoin implied power reor- claims

The Commission investigation, pending under ganization Power, of Montana regula- supervision, power grant legislative of “full Power 69-3-102, MCA. in section tion, and control” Company argues author- that the Commission exceeded issuing ity by notice order, motion without on its own implementing its hearing, enjoining Power from reorganize. decision to supervise right regulate rates and

The Commission’s undisputed. 69-3-301 sections 69-3-108 See services juris- scope- through Commission’s -330, MCA. The corporate reorganization and the existence diction over sponte enjoin here. are at issue sua expressly statutory provision Commis- authorizes no Since reorganization corporate for- in the involvement sion Chapter 3, corporations, to Title we look of new mation scope the Commis- whole, to determine MCA as utility” “public Chapter powers. 1 of defines Part sion’s specifies powers; general Part the Commission’s and. requirements function; public must utilities which under procedures; ratemaking forth the Commission’s Part 3 sets procedures and Part defines for review of Commission actions. 69-3-106(1), Section “Supervision MCA, entitled of Man-

agement of legislature’s Utilities,” Public grant defines the general of investigatory to the Commission: “The inquire commission shall have into the management public of the business of all utilities, shall keep itself informed as to the manner and in method which the same is conducted, right and shall have the to obtain any public utility necessary all information to enable perform the commission to its duties.” (2) permits Subsection of this statute the Commission to inspect books and records agents and to officers, examine employees and utility. (3) Subsection authorizes the production Commission to order parties of records. Both agree here that section 69-3-106, MCA authorizes the Com- investigate mission to proposed reorgani- Power’s zation and reorganization determine how might the affect future rates and services. Section significant 69-3-110, specifies MCA is in the public

manner utility in which by law to be enforced the Commission:

“(1) inquire The commission any neglect shall into or vio- lation of by the public of any laws utility this state . . . provisions commission shall enforce chapter of this report all general. violations attorney thereof to the “(2) charges, rates, All fares, joint classifications, and rates by fixed commission prima shall be the. enforced and are facie lawful from the changed date of the order until or pursuance modified part commission or in 4. All practices, rules, prescribed by and services the commission shall be enforced and enforcement brought actions shall be pursuant provisions part prac- rules, 4 until the tices, changed or services are or modified the commis- satisfactory sion showing being made.

“(3) Upon request duty commission, isit attorney general prosecuting attorney or any hearing, prosecution, or any investigation, county to aid chapter to insti- provisions of this had under trial necessary for proceedings prosecute or all actions tute chapter. of this enforcement re- be penalty shall “(4) Any herein forfeiture brought name in the thereon shall suit covered jurisdic- county having any court district state in the attorney general be the shall defendant. tion hearing, investigation, trial proceeding, any counsel commission, shall also prosecuted or defended by other or attorney commission the prosecuting selected county any in commission special the furnished counsel pending. is action such where by provided this

“(5) remedies to the other In addition any punishment violation of prevention chapter commission, of the provisions all orders thereof and of the provi- compliance compel may with the the commission by commission chapter the of the orders and of this of sions by injunction, by civil other mandamus, proceedings in added) (emphasis remedies.” sys- court the use Commission Legislative that the intent is clear. tem pursu- order, issued comply a commission with to Refusal utility subjects liabil- to MCA, the 69-3-106, to section

ant action” in a civil recovered ity to “be fine is a fine. for party. complaining the would be Commission in which legislative 69-3-206(2), that intent Here MCA. Section again obvious, system since the court utilize Commission complaint by filing a only be commenced can action a civil Rule Mont.R.Civ.P. the court. with (“Requirements of in Part for remedies Other (1) Utilities”) Chapter civil action 3 include: of Public reports or make payments penalty failure to for recover to permit (section 69-3-208, utility records examination payments penalty for vi- (2) MCA); to recover a civil action MCA); (section 69-3-207, safety regulations olation “any penalties violations (3) for court enforcement requirement lawful by any or order made the commission (section MCA). 69-3-209, court” Legislative that intent system require- use the court to enforce its ments, regulations and orders is evident from language 69-3-206(2) -207(2), of sections provide: both which “Such fine shall in be recovered a civil action complaint competent commission court of jurisdiction.”

It is suggest anomalous to Legislature granted implied power enjoin a corporate reor- ganization while requiring go the same Commission to court collect $100 fine. - (sections provisions enforcement 69-3-110, 69-3-206, -209, MCA)

207 and specifically do not extend the Commis- sion’s inquire management, into in sec- defined 69-3-106, tion MCA. None of provisions these authorizes or suggests that the Commission should enforce its orders temporary restraining injunction order or issued Commission itself. Procedures”)

Part 3 (“Ratemaking of Chapter provides filing rates, charges, schedules tolls and review Commission, complaints processing public. 69-3-321(1), Section permits MCA any to investigate complaint against public utility made a by person a or entity “directly by affected” the util- rates, ity’s tolls, schedules, charges, regulations, measure- ments, practices, 69-3-324, acts or service. Section MCA au- thorizes the Commission investigation to initiate an without complaint by a formal party: an affected “The may time, motion, any upon commission at its own investigate any rates, tolls, rules, practices, charges, and provided part services and after a in this full as may by make order such changes may just be and rea- sonable, the if complaint same as had made.” formal been

Again, rates, this investigation initiation of is limited to tolls, charges, rules, practices and services. (“Review Actions”),

In legisla- Part 4 of Commission injunctive relief from ture authorized district courts to issue and review reasonableness commission orders to provisions Like the enforcement lawfulness of such orders. provisions in of Part refer Parts the review speci- parties system. 69-3-402, MCA, to the court Section may seek relief from orders. Section fies who commission 69-3-403(1), MCA, to review district courts authorizes the proper injunctive such orders and issue relief showing: party

“Any being interest, with the order in dissatisfied fixing any charge, fare, classification, rate, the commission any joint fixing prescribing rule, or rate or order may practice, apply service, for an district court operation injunction, staying suspending the or- pending final determination der the commission lawfulness of said the reasonableness and Upon showing injunction proper shall issued courts. added) (emphasis by such court.” 69-3-110(5) 69-3-403(1), only MCA, are Sections Chapter “Regulation of Title 69 in the of Utilities” statutes injunctions. above, As noted that deal with the grants to the Commis- neither of these statutes parties enjoin sion to utilities. Both statues direct the standing rem- to seek civil district court. The Commission’s only specif- ratemaking authority are the tools edies and its ically by Com- which the statute as methods may supervise, regulate utilities. mission and control 69-3-102, MCA, invests the Commission

Section supervision, power regulation, and control” with “full public therefore, Commission, has discretion utilities. accomplish choosing func will means which it legisla power however, not, have limitless tions. It does analyzed scope prerogative. Having tive statutorily granted Commission, find no basis we by implication, respondent’s legislature, that the contention prohibit corporate given reor ganization order. its own Commission, legislature’s public intent that parties

utilities and expressed affected use the courts is in parts all Chapter four 3 of the Public Utilities Act. Use system provides necessary the court a check and balance. The legislature has a procedural framework that should not be merely abandoned because the matter to be investigated the Commission specifically was not ad by the legislature. dressed

Excepting prohibiting orders termination of service pend- on ing hearing a consumer complaint, in nothing Chapter 3 legislative indicates to grant intent to the Commission power broad injunctions issue or orders of type. that On contrary, those specifically sections that deal with the injunctions expressly direct the Commission to the district courts. addition,

In the legislature specified that, upon motion Counsel, persons Consumer interested legal their representatives, may district restraining court enter a or- der prohibiting utility engaging a certain course of pending investigation. conduct a formal a restraining Such may become an injunction for the duration of the proceeding 27-19-203, before the Commission. Section Although MCA. applies this section to “continuation or in- terruption service,” it illustrates clear legislature intent that the Commission apply restraining to the court or- ders and injunctions, rather than issue such orders itself. summary,

In legislature has concluded that Com- mission does not judicial powers consistently and has set forth its view that enforcement Public Utilities Act the Commission is in- sought through to be court junctions process. or other argues court The Commission that possibility irreparable harm irreversible ratepayers warranted its in prohibiting conduct further ac- tion Power and that reasonable to infer protect such a ratepayers. argu- order to That ment disregards granted the remedies which are mentioned, 69-3-110(5), previously Commission. As section MCA, compel compli- provides may chapter by injunction provisions with the ance the district court. 1982, of the re-

On the Commission was advised March reorganization plan in organization plan. step The next that stock- Montana Power question was to submit Com- May ample time for the holders on 1982. This left proceed Following order. injunctive mission to to seek an hearing at notice Montana Power and appropriate to showing the present could evidence which the Commission from the possibility irreparable of irreversible and harm properly corporate reorganization, Court could District if were sufficient to injunction, have issued an the evidence steps in discretion of the court to restrain further move the reorganization. do not ex- statutes of Montana We conclude that confer pressly by implication or utility of a or

power enjoin to restrain the establishment holding during investigation. The Commission has company summary for exercise such a any failed show need its restraining are prohibition means for power. Adequate that system. in We further conclude the court summary power to grant of the reasonable doubt of the against the existence the Commission will be resolved not have the Commission does power. We hold that or restrain re- summary power by prohibit own order to its during investigation. organization

III. Court, no evidence was In the District before otherwise, Commission, show- of the or submitted behalf prohibition for the restraint. ing factual need of Montana in behalf only submitted was evidence to submit evidence Power. Had the Commission chosen contentions, appropriate been might substantiate its the im- restraining District to enter Court of a fac- In the absence reorganization. of the plementation conclusion, tual basis such a the order of the District Ironically, Court cannot be sustained. the District Court ruled that it had factual basis on which to exercise its no powers; yet, injunctive own Commis- it concluded that the enjoin sion had without factual demonstrated stay reorganiza- basis and affirmed the Commission’s granted tion. holdWe that the District Court should have prohibition against the writ the Commission.

IV.

The last is issue whether the Commission approve disapprove proposed matter reorganization. recognize question We that this the cen proceeding place taking tral issue Com before the pursuant mission to its order of March We there 1982. 1, premature fore conclude that it would be for this Court to attempt ripe to rule on that issue. issue be That will not for by our consideration until the decision proceeding subsequent proceedings its own in the Dis trict Court. We therefore do not rule on Issue 3. judgment

The of the is District Court reversed and the entry appropriate cause is remanded for the an writ prohibition against the Public Service Commission.

MR. CHIEF JUSTICE HASWELL and JUSTICES HAR- RISON and GULBRANDSON concur. dissenting: MORRISON,

MR. JUSTICE respectfully aspects majority’s I from dissent all opinion. abundantly It is clear to me that if Public Ser- statutory powers vice Commission’s are to all be at mean- ingful, the Commission must have the to issue or- exercising powers. ders deemed for essential those by prohibits Commission, March which 1982, implementing proposed Power reor- ganizational plan pending investigation by an Commis- plan effects, sion of the and its an such order. 380 express statutory provision giving

Granted, there is no power hearing, issue, notice or Commission the without strictly order. we not limit the Commis- But should powers granted. expressly legislature sion’s to those possibly every which can not foresee circumstance under express powers. Therefore, the Commission will exercise its previously, recognize that and should continue to we have by implication, given legislature also, the Commis- powers required carry express powers. out its sion depart powers officer, which commission or “But the an may expressly are those ment exercise not confined to granted ‘In of the state. ad the Constitution statutes powers upon expressly law, him conferred dition necessary by implication powers officer has such as are expressly granted, or the due efficient exercise of those may fairly implied But no will such as be therefrom. necessary implied ef than which be other those are discharge powers ex duties fective exercise pressly (46 1032.)” High v. Guillott State conferred.’ C.J. (1936), way 149, 153-154, P.2d Mont. 56 1072, 1074. holding case not

To reaffirm this would be contra only granted to be wherein we have held the Commission upon legislature. powers expressly those conferred City example v. Service Commis Polson Public See for (1970), P.2d not be Mont. 508. We would sion powers, giving Rather, we as such. the Commission new pow implement giving needed to would be it the tools expressly im . “. . no will it. ers conferred necessary plied exercise for the effective other those than expressly powers discharge con and of the duties and Dragstedt Board Educa v. State ex Rel. State ferred.” (1936), 330, 338, 332-332. P.2d tion 103 Mont. upon expressly Commission are the conferred gives the 69-3-102, MCA, broad. Section public regulate supervise, utilities. and control to Chapter 3, Title MCA, 69-3-108, Part Section authority super- give specific MCA, the Commission the regulate vise, control the services by public implemented 69-3-324, rates utilities. Section permits investiga- MCA, initiate Commission to its own “any charges, practices, rates, tolls, tion of and ser- public utility. finally, 69-3-106(1), vices” of a And section MCA, states: (1)

“Supervision management public utilities. authority inquire Commission shall have into man- agement public keep utilities, business of all shall it- self informed to the manner and method which the right conducted, same is any public utility and shall have the from to obtain necessary all enable information to perform commission to its duties.” investigate, pursuant The Commission wishes to section proposed 69-3-324, MCA, the effects of Montana Power’s reorganization undisputed on rates and services. It is expressly granted that the Commission is undisputed do so. It should also be that in such an investigation meaningful, any reorganization to be Mon- stayed, pending completion tana Power must be of the in- vestigation. investigation Otherwise, the results might very powers expressly moot, well be and the be- stowed the Commission rendered useless. example, investigation may

For an without such an order reorganization adversely disclose that the will affect Mon- reorganization services, tana Power’s rates and but that the already holding company has resulted in a insulates which companies the individual control. the Commission’s people of Montana would then lack recourse against Surely legislature the adverse rates services. consequence. did not intend such a property “When ‘one devotes his to a use in which the public grants public interest, has an he in effect use, interest in that and must to be submit controlled public good common extent of the inter- ” est he thus Great Co. created.’ Northern Utilities v. 382 205,

Public Service Commission (1930), 180, 88 293 Mont. 294, 298, P. Hale, approved quoting Lord Chief Justice German Alliance Ins. Co. v. Lewis by Supreme the Court in 389, (1914), 612, U.S. 1011. 34 S.Ct. L.Ed. proper the Com- majority considers the recourse for judicial system. Again, agree. to be the I

mission cannot 69-3-110(5), MCA, Section sets forth when the Commission may judicial seek action:

“(5) by In addition to the other remedies this prevention punishment any the of violation chapter for commission, of provisions the and all orders of the thereof the may compel compliance provisions commission with the by pro- chapter this the orders of commission mandamus, other civil ceedings by injunction, by remedies.” has standing judicial no to seek action because, examples majority unlike in the

here cited compli- opinion, compel is purpose order not to this MCA, nor any provision Chapter Title is ance with compliance order the Com- compel with issued purpose merely stay Montana Power’s re- mission. Its is organization, pending investigation an authorized Commission. judi- standing if to seek a

Even the Commission did appro- cial would be remedy, judicial none remedies or a re- priate. preliminary injunction In order obtain a order, present would have to straining irrepara- showing possibility of irreversible evidence 27-19-201(2), Section reorganization. ble harm due to that, there would If Commission could have done MCA. order the investi- no need the freeze because have been addition, In complete. gation practically would have been no benefit restraining would temporary only days. last ten Commission because it would statement majority’s I with the exception also take must actually order and judicial Commission’s order administrative inappropriately issued therefore agency.

A four-part adopted by test been the state Wash- ington distinguish legislative-type judicial activities from actions.

(1) charged Whether the court could have been in the first instance with responsibility making the decision the body make; administrative must (2) Whether the function the per- administrative agency forms is that courts have historically one been accustomed performed to performing prior had to the creation of body; administrative (3) Whether the application action involves the existing of past law to present or facts for purpose declaring of or enforcing liability reflecting rather response than a changing through conditions the enactment of a new law of prospective application.

(4) Whether ordinary action resembles the business of opposed courts as to that of legislators or administrators. (1975), 575, Francisco v. Board Directors 85 Wash.2d 537 789; P.2d (1977), reaffirmed in Standow v. City Spokane 624, 88 1145, Wash.2d 564 appeal P.2d 434 dismissed U.S. 992, 626, 98 S.Ct. 54 L.Ed.2d 487. test,

Under this clearly the Commission is not judicial and the not Commission did exceed the limits of its powers in issuing I it. find:

1. The Commission has the responsibility initial for deter- mining by public whether actions utilities affect their rates or services.

2. function, The performed except courts never that review initial administrative decision Commission.

3. There has been no or of liabil declaration enforcement ity. This is an applied order which prospectively. would Therefore, legislative it is more a ac judicial action than tion. v. Strumsky Diego County Employees San Retire (1974), 805, ment Ass’n 11 Cal.3d 112 Cal.Rptr. P.2d 29. clearly

4. The action resembles that of administrators. is forth in the foregoing responds to that which set majority opinion guidance pro- these counsel or, in ceedings, holding other words to dictum. majority disregarded is the consti- that process rights when is- tutional due of Montana Power summary hearing. its order without notice or sued deprived process rights any person Due attach when is life, corporation A is in the liberty property. or included “person.” right carry term “The on a business lawful process requires it not be unrea- property right; due that Const., sonably unnecessarily Amend. restricted. U.S. XIV, 1; II, (emphasis 1972 Mont. Art. Sec. 17.” Sec. Const. Billings Plumbing, Heating Assoc. & Cooling supplied) v. (1979), Contractors State Board Plumbers 602 P.2d 597, 600, St.Rep. 1998-1999. carry right

Montana Power has failed to show that unreasonably unnecessarily on a lawful business has been right That has not been restricted. restricted. it has for carry

Power on its business as remains free investiga- years, pending completion Commission’s Further, has, been no yet, tion. there determination is proposed reorganization legal. Montana Power’s There- fore, possibly proved not Montana Power could its reorganization right of its restricted temporary stay the the or- to on a business.” Since Commission’s “carry lawful interest, protectible no notice or der not restrict a does of order. required prior to the issuance was issue, I process reempha- Finally, with to the due respect Montana Power to merely requires the order size that is,” pending comple- system “as management maintain its of purpose The investigation. tion of the Commission’s has the Commission determine whether investigation proposed reorganization. over Montana Power’s jurisdiction jurisdic- its power of its to determine agency Exercise an v. Able Contrac- Marshall hearing. a require tion does not tors, (9th Cir.1978), F.2d 1055. Inc. 573 opinion inadequate legal majority, bases, with ability

essentially strips of to effec- Commission tively legis- expressly granted exercise the it opinion day majority lature. The the is- reserves to another sue ultimately stop whether the Public Service Commission can reorganization. predict I that issue will accomplished. reorganiza- If become moot reason of fact prevents examining price tion from Montana P.S.C. Company pays subsidiary Power Mon- its for coal then the ratepayer system tana will be will the loser and the court party have sanctioned the victimization. I will not be this result. KEEDY,

THE HONORABLE MICHAEL H. DISTRICT dissenting:* JUDGE,

*Sitting place of MR. JUSTICE SHEEHY. I would affirm the decision of the District Court. pro- March 1982 order of the Public Service 1, Company implementing hibited Montana Power reorganization plan pending investigation by Com- mission to determine whether it would have plan. circumstances, over the Under these order was a proper authority. regulatory exercise Commission’s legislature

The Montana has invested the power supervision, regulation, “with full and control of (Montana Power), provisions (Chapter MCA) Title . . .” Section MCA. Provisions 69, 69-3-102, Chapter give specific powers regula- imposed tion and control over services and rates by Montana Power. See sections Part 3 69-3-108 may Chapter hand, Title not MCA. On other utility’s have the or to abuses correct neutralize corporate, pro- managerial rights reorganization of its posed if the place. corporate plan already taken Because this potential irreparably impair has the Power’s upon power bearing services, or to rates insulate decisions supervision Commission, from the control and and the 386 clearly potential effects are within Com-

because these authority, investigation regulatory mission’s an before proper, warranted, is also within the Commission’s fact authority. at- its order has not substituted or tempted judgment its own for that of Mon- substitute regarding Directors, tana Power’s Board of as no decision corporate reorganization the Commis- has been made made, is, sion. such if it Montana Power When a decision is judicial any then In the can seek relief from claimed harm. meantime, however, Commission must be to ex- allowed regulatory authority in first ercise its instance deter- impact which mine the nature and extent of adverse proposed reorganization rates would scope jurisdiction regulating, services, its own corporate prohibiting controlling, if endeavors or even fairly anticipated, are deter- harmful effects can be mined to material. only investigation indicated, in a de

As would result jurisdiction the Commission has termination whether plan. reorganization It is a well-es over Montana Power’s agency principle law tablished administrative right duty, instance, in the first to determine the by companies own over actions extent its Burlington North Marshall v. which under its reach. come (9th Cir.1979), 511; v. Able ern, F.2d Marshall Inc. (9th Cir.1978), Contractors, F.2d Inc. 1055. reorganiza- proceed Allowing with its Montana Power to ju- investigates to its determine tion while the holding company structure risdiction could result utility’s rates and services which insulate would Commission’s statu- Commission. The further review the torily-granted regulatory thereby be rendered would reorgani- stay totally Without the useless. investigation, pending “jurisdiction” Commis- zation any ability might stripped otherwise have sion good. common control Montana Power empowered to, generally “Public service ‘commissions are should, they regu- with the intention that and are created operations public late utilities insofar as the public 64 such utilities affect interest and welfare.’ Utilities, Public 740.” Northwestern Am.Jur.2d, 232, p. § Telephone Hagen Bell Co. v. (N.D.1975), 841, 234 N.W.2d 845. reiterate,

To the Commission’s in imple- order assists mentation of its right jurisdic- determine whether it has tion over reorganization. Montana Power’s The Commission has sought not unlimited authority over Montana Power’s managerial decisions, nor does the District Court’s decision authority Rather, confer such upon the Commission. merely the Commission is attempting to effectively exercise authority, 69-3-106(1), MCA, under section inquire into management of the business of Montana Power.

The exercise of that would be an empty cere- if, mony inquiry while such an conducted, were being prohibit could not proposed execution of the management decision. This is particularly true where the decision, made, once may incapable become being re- by versed may permanent deleterious effects utility’s rates and services. Finally, Montana Power has neither alleged nor demon- any irreparable strated harm as a result of the Commis- sion’s order. No in changes actual the reorganization plan can be mandated the Commission without a full hearing, after which Montana Power judicial could seek relief from any claimed 69-3-326, harm. Sections 69-3-324 through Thus, MCA. proves Montana Power’s due rights were not violated fully pro- Commission’s order and will be tected the future. 1, March 1982 order the Public Service Commis-

sion was in furtherance of the responsibility Commission’s protect “future, present, well as consumer interests.” Cases, In re Permian Basin Area Rate 747, 798, 390 U.S. 1344, 1376, 312, S.Ct. 353-354; 20 L.Ed.2d reh. den. 392 (1968). 2050, U.S. 88 S.Ct. 20 L.Ed.2d It should upheld. SHEA, dissenting: MR. JUSTICE I views of Morrison ex- agree generally with the Justice dissent, pressed general in his views and also with the I Keedy. also own views in Judge my dissenting add opinion the Public majority stripping Service Commis- implied powers quo sion status until of its to maintain the question decision on the matter been made. baffling. In majority decision on the issues raised

deciding issue the contention that the Commission could not issue the restraint without notice Com- company, majority impliedly holds that the an if mission does have the to issue of restraint order complied procedural safeguards it with the of notice and temporary if hearing. For the Commission could not issue a restraint, idle be an act. order notice would issue just on majority opposite But then decides have author- question of whether the does major- ity of restraint. Here the temporary to issue a order authority. has no If ity such holds that hearing given pursuant is the case then notice that authority assumption the Commission had an ruling on issue majority’s idle would be an act indeed. Commission, it and had gave once notice means that an of restraint. hearing, through could not follow with order issues, question on 3 the to further confuse the issue And subject jurisdiction the Commission had matter whether the ma- approve proposed reorganization, disapprove has, by rule that administrative jority invoking the rule on opportunity to agency given should first be is adminis- own to rule. The result jurisdiction, declined trative chaos. Commis- the Public Service majority decision leaves quo pend- the status stripped authority

sion to maintain jurisdic- subject matter ing it has its decision whether may well be out of the barn if the tion. The horse subject jurisdiction rules it has matter Commission later prohibiting reorganization. and enters an order The ma- jority suggests proper that the avenue for the Commission go temporary restraining is to court and obtain order. points go But, out, the as Justice Morrison Commission can restraining only par- if to court to obtain a one of the obey jurisdiction ties under its refuses to its order. Here the Company obeyed order of Montana Power restraint but challenged at the same time that order court. Had the Company proceeded reorganization Montana Power with its order, efforts violation of the then Commission’s gone temporary could to court to obtain a restraining order. primary question

If this Court refuses to rule on the whether the Public Service Commission has matter jurisdiction, initially but instead leaves the matter Commission, decision of the Public Service then the Com- stripped mission should not at the same time be maintaining quo means for the status before it reaches its precisely happened decision. But that is what has here. temporarily The Public Service Commission has least at question assumed over the whether has the approve disapprove proposed reorgan- of or temporary assumption juris- ization. To effectuate this Company diction it has told the Montana Power not to re- organize investigated until the Commission has the effect of reorganization making regulatory pro- on the rate question cess. this Because Court has refused to rule on the subject jurisdiction, point matter we must at this assume jurisdic- that the Public Service Commission does have that simply steps tion it and that has the taken maintain the quo pending investigation. status its This Court should not juncture, strip at this the Public Service Commission of the maintaining quo pending means of the status the outcome investigation. of its of the Commission to main- quo necessity implied tain the status must of if the Com- be meaningful powers. regulatory is to mission have simply the of main- Because Commission’s order one quo investigation taining pending the its and final status question determination, which includes a of whether the subject jurisdic- Commission will hold that it has matter Company tion, I fail to see how the Power had Montana right maintaining the to notice and before the order quo juris- status was The Commission does not have issued. Company on case case diction over Montana Power continuing Rather, has over the Mon- basis. it Company administering pro- regulatory Power tana simply continuing jurisdic- cess, this one of this act was Furthermore, I fail to see harm the Montana tion. give Company no- Power because this claimed failure opportunity participated It tice and an fully heard. has be proceedings in all before the Commission. time maintain-

From the the Commission issued ing quo present time, the Montana the status until Company fully participating in the Com- Power has been fully coop- apparently investigation, and has been mission’s Surely erating Power the Montana with the Commission. opportunity Company every its to let has availed itself views be known to the Commission. views, the trial on I the order of

Based these would affirm remain let Public Commission’s order court and Service question for itself in effect at least until it has decided subject jurisdiction. If the Com- whether it matter subject jurisdiction, if it mission rules does have matter Power Commission further rules that Company reorganize, case I no doubt that the cannot system. again through way the court will once thread happen not I would for that But wait implied deprive of its meantime quo on decision before it reaches a to maintain the status question jurisdiction. matter appears Despite my issues, now that on the views opinion, majority Commission will Public Service asking compelled for a Court action District to file an pending restraining temporary in effect order to remain only bog approach, ruling. however, will This Commission’s party appeal process, any aggrieved could down might the District Court action that this Court take.

Case Details

Case Name: Montana Power Co. v. Public Service Commission

Court Name: Montana Supreme Court

Date Published: Oct 27, 1983

Citation: 671 P.2d 604

Docket Number: 82-340

Court Abbreviation: Mont.