Appellees. ANSWER BRIEF OF APPELLEE...

IN THE SUPREME COURT OF THE STATE OF MONTANA

CAUSE NO. DA 11-0382

DR. PAUL WILLIAMSON, REV. DR. ‘fERN )KLINGMAN, PATRICIA KLINGMAN & )RUSSELL L. DOTY; JAMES T. &ELIZABETH GRUBA and LEO 0. & )JEANNE R. BARSANTI, )

)Appellants, )

)vs. )

)MONTANA PUBLIC SERVICE )COMMISSION and )NORTHWESTERN ENERGY, )

)Appellees. )

ANSWER BRIEF OF APPELLEEMONTANA PUBLIC SERVICE COMMISSION

ON APPEAL FROM THE THIRTEENTH JUDICIAL DISTRICT COURTYELLOWSTONE COUNTY, MONTANA

ATTORNEYS FOR APPELLEES ATTORNEY FOR APPELLANTSJames C. Paine Russell L. DotySpecial Assistant Attorney General 3878 N. Tanager LuP.O. Box 202601 Billings, MT 59102-5916Helena, MT 69620-2601 (406) 696-2842(406) 444-6377 Fax: (206) 984-4876Fax: (406) 444-7618 jwin4u~eaflhuink.netjpaine2(~mt.gov

Monica TranelTranel, McCarter & Morris, PLLPGreat Northern Town Center30 West 14th Street, Suite 204Helena, MT 59601(406) 513-1105MTranelØ~tranelfirm.com

FILEDOctober24 2011

SmithCLERK OFThE SUPREME COURT

STAlE UP MONTMA

TABLE OF CONTENTS

STATEMENT OF THE ISSUES 1

II. STATEMENT OF THE CASE 2

III. STATEMENT OF THE PACTS 4

IV. STM’IDAJU) OF REVIEW 7

V. ARGUMENT 8

1. The Commission’s denial of Appellants’ motion to amend Their complaintshould be affirmed 8

2. Appellants lack standing to bring a complaint contesting NWE’s street andarea lighting tariff as they are not “directly” affected by the tariff, as isrequiredunder § 69-3,321, MCA 12

A. Appellants are not “directly” affected by NWE’s street and area light rates,tolls, charges or schedules 13

B. Appellants are not directly affected by the regulations, measurements,practices ofNWE in its production, transmission, delivery or furnishing ofstreet lighting, or by Appellants’ right to a clean and healthfulenvironment 16

3. Appellants have not shown that Article II, § 16 of the Montana Constitution isapplicable to their described circumstances; i.e. Appellants have not shown thatthey have suffered property damage 20

4. Appellants’ theories of what “directly” means should be dismissed asAppellants use out-of-record materials to argue their case 21

5. Appellants provide no support for their contention that standing under the “legalequivalent of all standing provisions” doctrine affords them standing 21

6. Standing is not afforded simply because of asserted expertise by complainantsor plaintiffs 22

7. Appellants provide no explanation or supporting legal precedent for theirassertion that Appellants are directly affected due to the existence of a “jointrate.” 24

8. Appellants should not be found to have standing due to an alleged thirdparty beneficiary relationship to local government-NWE contracts 25

TABLE OF AUTHORITIES

Cases

Benjamin v. Anderson2005MT123,P31,327Mont. 173,P31,112P.3d1039,p31 8

Clark v. Eagle Systems, Inc.(1996), 279 Mont. 279, 927 P.2d 995,53 Mont. St Rep. 1150 9

Den/ce v. Shoemaker2008 MT 418, P39,447 Mont. 322, 198 P.3c1 284 7

Diamond et al v. Charles et aL(1976), 476 U.S. 54, atpp. 59-60, 106 S.Ct. 1697, atp. 1705,90 L.Ed.2d48, atp. 60 24

Farmers Alliance Miit. Ins. Co. v. Holeman(1996), 278 Mont. 274, 924 P.2d 1315 15

Giyczan v. State -

(1997),283 Mont.433,442-43, 942P.2d 112,118. l96Montpp.218-219 17,18

Hulse v. State Dept. ofJustice1998MT108,P15,2s9MontI,p15,961p2d75p15 9

In re Montana All-Alcoholic Beverages Resort License2008 Mt 165, P 26, 343 Mont. 331, P. 26, 184 P.3d 324, P26 8

Lohmeier v. Gallatjn County2006 MT 88, 332 Mont 39, 135 P.3d 775 18

Missoula City-County Air Pollution Control Bd. v. Bd. OfEnvt. Review(1997), 282 Mont 255, 937 P.2c1 463 18

Mont. EnvtL Info. Or. v. Dept ofEnvtl. Quality (infra) 18

Montana Environmental Information Center, et aL v. Dept. ofEnvironmental Quality1999 Mt 248, 196 Mont 207, 988 P.2d 1236 (1999) 17

Pannoni v. Board ofTrustees2004 MT 130, P 25, 321 Mont. 311,90 P.3d 438 7

Phillzps v City ofRillings(1988), 233 Mont 249,252, 758 P.2d 772, 774 9

Singleton v. Waif428 U.s. 106,96 S.Ct. 2868,49 L.Ed.2d 816 (1976) .23

Total Mechanical Heating v. UEF2002 MT 55, P23, 209 Mont 84, 50 P.3d 108 7

Statutes

Mont. Code An,~. § 2-4-70] 3 7

Mont. Code Ann. § 2-4-702 3

Mont. Code Ann. § 2-4-704 7,

21,22

Mont. Code Ann. § 69-3-30] 26

Mont. Code Ann. § 69-3-302 26

Mont. Code Ann. § 69-3-305 26

Mont Code Ann. §69-3-306 13

Mont Code Ann. § 69-3-32] 1,

3, 5, 6, 8, 9, 11, 12, 14, 15, 16 20

Administrative Rules

Admin K Mont. 3&2.]207

AdrninR. Mont. 38.2.4805 10

Admin 1?. Mont 38.2.4806 10

Constitutional Provisions

ArticlelL.f3

6, 16, 17,24

Artic1eJJ,,~’J6 1,

20

I. STATEMENT OF TIlE ISSUES

1. The District Court was correct in affirming the Montana Public

Service Commission’s (“Commission”) rejection of Appellants’ (or

“Complainants”) proposed amendment to their complaint despite the Court’s

mistaken belief that an administrative hearing had taken place before Appellants’

attempt to amend their complaint, and, before the complaint was dismissed for lack

of standing.

2. The District Court was correct in affirming the Commission’s

detem~inations that Appellants lacked standing because: (a) Appellants were not

directly affected by NorthWestern Energy’s (“NWE”) street and area lighting

tariffs as is required under § 69-3-321, MCA; and, (b) Appellants’ asserted

environmental injuries or harms are indistinguishable from that experienced by the

general public.

3. Appellants have failed to show that Article II, § 16 of the Montana

Constitution is applicable because Appellants have not shown that they suffered

property damage.

4. Appellants’ arguments addressing what “directly” affected means

should be dismissed as Appellants use out-of-record materials to argue their case.

Commission Answer Brief

5. Appellants provide no support for their contention that a “legal

equivalent of all standing provisions doctrine” affords them standing therefore

their contention should be ignored.

6. The asserted expertise of two of the Appellants does not afford

Appellants standing to bring the complaint.

7. Appellants’ assertion that they are directly affected by NWE’s street

and area lighting tariffs due to the existence of a so-called “joint-rate” should be

ignored for Appellants provide no explanation or legal precedent supporting for

their contention.

II. STATEMENT OF THE CASE

This matter was before the Commission as a result of the filing of a formal

complaint submitted by Dr. Paul Williamson (a Missoula, Montana resident), Rev..

Dr. Vern Klingman, Patricia Klingman and Russell Doty (all Billings, Montana

residents). Appellants alleged among other things, that the rates and charges

assessed under NWE’s Commission-approved street and area lighting tariffs are

excessive, unreasonable, and unjustly discriminatory; that the ownership charge,

one of the components ofNWE’s billings for the provision of street and area

lighting service, should cease when the cost of an installed NWE-owned street

light has been entirely defrayed; that the Commission should issue an order

Commission Answer Brief 2

causing an immediate write-down from NWE’s ratebase of any street lighting plant

that has been fully paid for through an ownership charge; that the Commission

should issue an order providing for a reftnd ofup to $7,278,976 in past ownership

charges; and that the Commission should issue an order directing NWE to drop all

Olauses in its street lightinjcontracts preventing action of third party beneficiaries

of those contracts from obtaining redress of grievances for contract violation.1

The matter was processed by the Commission as a formal complaint filed

under the provisions of § 69-3-321, MCA. The Commission determined that

Complainants did not have standing to bring the fonnal complaint under the

referenced statute.2

011 August 23, 2010, Appellants filed their Petition for Judicial Review with

the Yellowstone County District Court under the provisions of the Montana

Administrative Procedures Act, § § 2-4-701, et seq., MCA, specifically, § 2-4-702,

MCA.

On June 15, 2011, the District Court for Yellowstone County issued two

Orders granting both the Montana Public Service Commission and NWE’s Rule 12

(b)(6) Motions to Dismiss Appellants’ Petition for Judicial Review and Appellants

brought review of these decisions before the Montana Supreme Court.

Original complaint of Complainants, Doe. 5eq. 6.100, Item No. 2, Admin. Record2 See Order Nos. 7084a and 7084d, Doe. seq. 6.100, Item Nos. 14 and 23, Admin. Record


III. STATEMENT OF FACTS

1. At the time of the filing of the original complaint with the

Commission, Appellants-Klingmans and Williamson were residential customers of

NWE; i.e., were assessed bills based on the provisions of NWE Tariff Schedule

REDS-I. NWE’s street and area lighting tariff is Tariff Schedule ELDS-I. The

electric rates assessed each customer class vary and are based on general rate case

cost of service studies that result in assignment of a revenue requirement for each

customer class (reflected in different Tariff Schedules). Appellants, except for

Williamson, were Montana property owners at the time of the filing with the

Commission and, according to Appellants’ Commission pleadings, paid property

taxes to their local governments.

2. On February 11, 2010, the Commission received Appellants’ formal

complaint, Docketed as D20 10.2. 14.~

3. Defendant~NvsrE filed its Answer to the complaint on March 17,

2010,~

4. NWE filed a Motion to Dismiss and Brief in Support on March 22,

20i0.~ Among other reasons justif3ring dismissal, NWE contended that

Complainants lacked standing to bring this complaint against NWE.

Doe. Seq. 6.100, Item 2, Admin. Record‘ Doe. Seq. 6.100, Item 6, Admin. Record

Doe. Seq. 6.100, Item 7, Admin. Record


5. Complainants filed their Affidavit and Brief in Opposition to NWE’s

Motion to Dismiss on April 2, 2010.6

6. NWE filed its Reply Brief in Support of its Motion to Dismiss on

April 14,2O1O,~

7. On May 20,2010, the Commission issued Order No. 7084a8 which,’

among other things, dismissed the complaint due to Complainants’ lack of

standing to bring a formal complaint against NWE’s street lighting tariffs under §

69-3-321, MCA. The Commission’s detennination of the standards to use in

analyzing the standing issue is set forth in Order No. 7084a.9 The Commission’s

ruling on the standing issue is found in FOF Nos. 4 1-60 of Order No. 7084a. The

Commission’s essential ruling was that Complainants are not members ofNWE’s

street and area lighting class of customers and that Complainants failed to show

that they are “directly affected” by NWE’s Tariff Schedule ELDS-1, NWB’s street

and area lighting tariff. The Commission found that Complainants failed to meet

the requirements of Section 69-3-32 1, MCA which requires that complainants be

“directly affected” in order to process a formal complaint before the Commission.

Appellants also maintain that they have standing to bring the formal complaint

under Article II, § 3 of the Montana Constitution which affords Montana citizens a

6Doc. Seq. 6.100, Item 8, Admin. Record‘ Doe. Seq. 6.100, Item 11, Admin. Record

Doe. Seq. 6.100, Item Nos. 14 and 16, Admin. Record.9J4~, FOFNos.21-40.


Thndamental right to a clean and healthful environment. The Commission found

that~~Eftd injury to

the public at large. The Commission determined that such a showing was a

necessary element to prove standing under Article II, § 3 of the Montana

Constitution.1°

8. On June 2, 2010, Complainants filed their Request for

Reconsideration11 and an Amended Complaint.12

9. On June 14, 2010, NWE filed its Opposition to Complainants’

Request for Reconsideration.13

10. On June 25, 2010, Complainants filed their Response to NWE’s

Opposition to Complainants’ Request for Reconsideration.14

11. On July 27,2010, the Commission issued its Order No. 7084cV5 which

granted in part and denied in part, Complainants’ reconsideration request. The

Commission granted Complainants’ reconsideration request to the extent that

Order No. 7O84a, p. 17 used the word “customer” when § 69-3-32 1, MCA used

the words “person, firm, or corporation. . .“ The Commission therefore changed

the wording to eliminate “customer” and utilized the statute’s wording. In all

other substantive aspects, Order No. 7084d affirmed the Commission’s dismissal

‘°Doe. Seq. 6.100, Item No. 23, Order No. 7084d, FOF Nos. 26-27.~‘ Doe. Seq. 6.100, ItemNo. 17, Admin. Record

‘2Doc. Seq. 6.100, Item No. 16, Admin. Record‘~ Doe. Seq. 6.100, Item No. 19, Admin. Record‘~ Doe. Seq. 6.100, Item No. 22, Adnain. Record~ Doe. Seq. 6.100, Item No. 23, Admin. Record


of the complaint due to lack of standing ofAppellants’ as was determined in its

May 20, 2010, Order No. 7084a.

IV. STANDARD OF REVIEW

The standards for reviewing a final decision of the Commisäion are whether

the agency’s findings of fact are clearly erroneous and whether its interpretation

and application of law are correct. Section 2-4-704(a)(a,), MCA; Denice v.

Shoemaker, 2008 MT 418, P 39, 447 Mont. 322, 198 P.3d 284. Review of the

decision is confined to the record. § 2-4-704(1), MCA, and the reviewing court

may not substitute its judgment for that of the agency as to the weight of the

evidence on questions of fact. § 2-4-704(2), MCA. That was the standard

applicable to the Yellowstone County District Court’s review of the Commission

decisions. The Montana Supreme Court employs these same standards when

reviewing the district court’s order affirming or reversing the agency’s decision.

Denke, P39. This Court reviews the whole record to determine whether the

administrative findings are clearly erroneous and whether the agency correctly

interpreted the law. §2-4-704(2)(a), MCA, Total Mechanical Heating v. UEF,

2002 MT 55, P23, 209 Mont. 84, 50 P.3d 108; Pànnonj v. Board ofTrustees 2004

MT 130, P 25, 321 Mont. 311, 90 P.3d 438. A factual finding is clearly erroneous

if it is not supported by substantial evidence in the record,if the fact-finder


misapprehended the effect of the evidence, or if a review of the record leaves the

Court with a definite and firm conviction that a mistake has been made. See

Benjamin v. Anderson, 2005 MT 123, P 31, 327 Mont. 173, P 31, 112 P.3d 1039, P

31; In re Montana All-Alcoholic Beverages Resort License, 2008 Mt 165, P 26,

343 Mont. 331, P. 26, 184 P.3d 324, P 26.

V. ARGUMENT

1. The Commission’s denial of Appellants’ motion to amend theircomplaint should be affirmed.

Appellants’ first three arguments focus on the Complainants’ attempt to

amend their complaint at the administrative level.’6 The Commission readily

acknowledges that the following District Court’s finding is inaccurate:.

“The record reveals that the amended complaint was not merely flIed afiernotice of the hearing, but filed after the hearing was held and Order No.7084a was issued.”7

There was, in fact, no hearing at the administrative agency level; rather, the

Commission dismissed the formal complaint due to lack of standing of the

Appellants to bring a complaint under § 69-3-321, MCA, in Order No. 7084a

(Service Date—May 20, 2010).

‘6See Table ofContents, p. I, ofAppellants’ Opening Briefandpp. 14-2 7.‘~ Dist. Court’s Order aiid Memorandum Granting NorthWestern Energy’s Rule I 2(b)(6) Motion to Dismiss, Doe.

Seq. 17.

Commission Answer Brief . 8

Nevertheless, the District Court’s mistake in assuming that the Commission

held a hearing prior to dismissing for lack of standing is not fatal to the

Commission’s ruling denying Appellants’ motion to amend their complaint, nor to•

the District Court’s decision dismissing the Petition for Judicial Review. The

Montana Supreme Court affirms district court deci~ions which are correct

regardless of the lower court’s reasoning in reaching its decision. Phillips v City of

Billings (1988), 233 Mont. 249,252, 758 P.2d 772, 774; Clark v. Eagle Systems,

Inc. (1996), 279 Mont. 279, 927 P.2d 995, 53 Mont. St. Rep. 1150; Hulse v. State

Dept. ofJustice, 1998 MT 108, P 15, 289 Mont 1, P 15, 961 P.2d 75, P 15. The

Commission contends that its decision denying Appellants’ request to amend its

complaint before the Commission was correct.

The Commission’s May 20, 2010 Order No. 7084a,’8 among other things,

analyzed Complainants’ standing to bring the formal complaint19 and determined

that Complainants (Appellants) did not have standing to initiate a formal complaint

under § 69-3-321, MCA.2° Complainants filed their Motion for Reconsideration

and amendment to complaint on June 2, 2010. The Commission denied their

attempt to amend and Motion for Reconsideration in Order No. 7084d21 (Service

~ Doc. Seq. 6.100, Item , Item Nos. 14 and 16 in Admin. Record19See Order Na. 79&4a, FOFNos. 21-60201d FOF Nag. 59-60.21 Doc. 5eq. 6.100,ItemNo. 23 inAdmin. Record


Date July 27, 2010). With regards to the attempted amendment to their complaint,

the Commission held as follows:

“30. The Commission readily acknowledges that ARM 38.2.1207 allowsamendments to any pleading or document prior to issuance of notice ofhearing, but also finds that such rule is necessarily affected by the issuanceof Order No. 7084a, an order that dismissed the cause of action. This is anissue of first impression before the Commission, but the Commissiondetermines that once a complaint or an application has been dismissed, theonly logical appropriate remedy left for the complainant or applicant is topursue one or more of the post order remedies set forth in ARM 3 8.2.4805(rehearing) or ARM 38.2.4806 (reconsideration). The dismissal of theformal cOmplaint is akin to a judgment against complainants and theCommission finds that the better rule under such circumstances is thatcomplainants no longer have a right to amend but retain a right to seekmodification of the order dismissing the filing.”22

After dismissal of a complaint, an application, or other filing, there is no

longer a hearing contemplated. If the Commission erred in dismissing the

complaint, the appropriate remedy for Appellants was to seek reconsideration or

rehearing of the dismissal. Appellants did, in fact, seek rehearing which resulted in

Commission Order No. 7084d. Petitioners, applicants and complainants should not

be afforded the ability to amend their petitions, applications or complaints after an

order summarily dismisses their filing; rather, the party should argue why the

dismissal was in error through a reconsideration or rehearing request. The

Commission asks the Court to find that this was an appropriate Commission ruling

~ Id., FOFNo. 30.


interpreting the existing agency administrative rule, in a case in which an order

dismissing the complaint had been issued.

Moreover, the Commission pointed out to Appellants in Order No. 7084d

that, even if the amended complaint had been allowed, the amended complaint did

not address the merits of the standing issue, nor did it eliminate the shortcomings

the Conmfission found with Appellants’ standing to bring the complaint.

“31. Even if the Commission authorized the amendment, the onlysignificant modifications to the original complaint consisted ofmodifyingcertain dollar amounts from the original complaint and adding additionalnamed complainants. Complainants aver that the newly-namedComplainants are residential customers who are also property taxpayersassessed fees as mómbers of a SILMD and ‘all of which have a small portionof their property taxes go to defraying the city’s prorate share of streetlighting costs.’ Complainants’ June 25, 2010 Response to NWE’s Oppositionto Reconsideration, p. 3. The added complainants may very well pay streetlighting district fees assessed by local city or county governments, but suchcircumstances do not present a persuasive, compelling reason to reconsiderthe Commission’s findings that Complainants do not possess standing tocontest NWE’s street lighting rates as they are not ‘directly’ affected byNWE Street lighting rates. See FOF Nos. 21,23 and 25 above and OrderNo. 7084a.”23

The Commission found that Appellants lacked standing to bring a formal

complaint contesting NWE’s street lighting rates and street lighting services. The

Commission’s holding was based on a determination that Appellants were not

“directly” affected by NWE’s Street lighting rates and services, as was required

under § 69-3-321, MCA. If, as is urged by the Commission, the Court affirms the

23 Order No. 7084c3, FOF No. 31, Doe. Seq. 6.100, Item No. 23 in Admin. Record


Commission’s rationale on Appellants’ standing issue, then Appellants’ proposed

amendment to its complaint does not overcome their lack of standing.

2. Appellants lack standing to bring a complaint contesting NWE’sstreet and area lighting tariff as they are not “directly” affected bythe tariff, as is required under § 69-3-321, MCA.

The Commission determined that the standing principles generally relied

upon for causes of action initiated in Montana courts can be distinguished from

standing principles applicable to cases initiated in administrative agencies.24 The

Commission detennined that the specific statute, statutes, or constitutional

provisions under which a complaint was filed determines complainants’ standing.25

Appellants’ filing with the Commission was processed as a formal complaint under

Section 69-3-321(1), MCA, which provides, in relevant part, as follows:

“U) The commission shall proceed, with or without notice, to make such• investigation as it may deem necessary upon a complaint made against any

• public utility by ...; or by any person, firm, or corporation, provided suchperson, firm, or corporation is directly affected thereby, that:

• (a) Any of the rates, tolls, charges, or schedules or any joint rate or rates arein anyway unreasonable or unjustly discriminatory;(b) any regulations, measurements, practices, or acts whatsoever affecting orrelating to the production, transmission, delivery, or furnishing of heat, light,water, power, or regulated telecommunications service, or any service inconnection therewith is in any respect unreasonable, insufficient, or unjustlydiscriminatory; or(c) any sewic~ is inadequate.” (emphasis added).

24 See Order No. 7O&4a, FOFNos. 41-45, Doe seq. 6.100, Item No. 14 Admin. Record

25See also, Order No. 7084d, FOFNo. 17, Doe. Seq. 6.100, Item No.23 Admin. Record.


A. Appellants are not “directly” affected by NWE’s street and arealight rates, tolls, charges or schedules.

Appellants’ formal complaint to the Commission alleged that NWE’s street

and area lighting tariff ownership charges were “excessive, unreasonable, and

unjustly discriminatory.”26

The Commission has statutory authority to establish “classifications of

service” through § 69-3-306, MCA. Pursuant to this statute, the Commission has

approved a number of customer classes for NWE. The electric rates assessed each

customer class vary and are based on general rate case27 cost of service studies that

result in assignment of a revenue requirement for each customer class. Rates are

then designed to generate sufficient monies to meet the class revenue

requirement.28

The Conmilssion determined that clearly, any member ofNWE’s street and

area lighting class such as the cities of Missoula or Billings, or Missoula or

Yellowstone County, would have standing to ~process a complaint asserting that

street lighting rates were excessive, unreasonable and/or unjustly discriminatory.29

These entities are NWE customers and are members of the NWE street and area

26 Original complaint, Doe. Seq. 6.100, Item 2, pp.2 & 6; See also Doe. Seq. 6.lOO,Item No. 14 Adinin, Record,

Order No. 7084a, FOP No.46.27 See, e.g.. minimum rate casefiling requirementsfor utilities, ARM §~ 38.4.101 et seq.28 Order No. 7084a, FOP No. 53, Doe. Seq. 6.100, Item 14 Admin. Record

291d., Order No. 7084a, FOP No. 57

Commission Answer Brief . 13

lighting customer class (Tariff Schedule ELDS-135; they are directly and legally

responsible for paying their individual NWE street lighting bill. Appellants are,

however, members of the residential class ofNWE customers and their electric

rates are governed by NW.E Tariff Schedule REDS-I ,31 In other words, Appellants

did not pay NWE provision of street lighting service, nor did they show that they

were “directly affected” by the NWE street lighting rates and charges:

“57 However, the Commission finds that Complainants have notshown that they are directly affected by NWE street lighting bills to thecities as is required by § 69-3-321, MCA. Complainants have not shownthat they are directly harmed or affected by NW]3 billings to the cities. Ithas not been sufficiently explained how the cities generate monies td payStreet lighting bills; whether Complainants themselves pay lighting districtfees in a district with NWE-owned streetlights; how the cities or countiescalculate lighting district fees to districts where NWE owns the street lightsas distinguIshed from districts in which the city or county owns the streetlights; whether lighting district fees are the only source of revenues for thecities or counties to pay their street lighting bills; how the city or countycalculates lighting fees in areas where there are no street lighting districts,but where there are Street lights; why Complainant-Wjl1iarnso~ would havestanding as a renter, not a property owner or property tax paying or lightingdistrict paying resident of Missoula.”32

In ruling on Appellants’ reconsideration request, the Commission held:

“23. .. .The members of the street lighting class are primarily and legallyresponsible for billings from NWE for the provision of street lightingservices. The residents of the city or county are not primarily or legallyresponsible to NWE for the provision of street lighting services; theresidents are primarily and legally responsible to their respective cities orcounties for taxes levied or street lighting district fees assessed. TheCommission disagrees with Complainants’ conclusion that the taxpayer,

‘°Id., FOF No. 53.31Id.321d., FOF No. 57. See also, Order No. 7084d, FOFNos. 15-25, Doe. Seq. 6.100, Rem Nos. 14 and 23 respectively.


renter or fee payer is primarily liable for a city or county Street lighting bill(Mot. For Reconsid., p. 6), but does agree with Complainants’ assertion thatthey may be “ultimately” (Id.) responsible. “Ultimately responsible” doesnot mean that persons so situated are directly affected. The Commissionalso disagrees with Complainants’ portrayal at page 7 of their Motion forReconsideration when it claims that there exists a statutory partnership inwhich the city pays the bills for the street light and thus performs theunreimbursed billing service for the utility. This does not accurately portraythe legal obligations of the city residents; the city is legally liable to NWEfor street lighting billings, not city residents.”33

If the Commission approves an increase in street lighting rates and charges,

members of the street lighting class of customers immediately pay that rate change

in the NWE billing cycle following the effective date of the Commission order.

That is not the case with residents that pay municipal street lighting district fees

assessed by the City. Changes to those fee assessments are calculated annually

and, presumably, a city considers a number of variables, including the total

projected street lighting charges to be assessed by NWE, any surplus or deficit in

previous years’ collections, and changes in number ofproperty owners in

determining such fees. Like Montana courts, the Commission, in interpreting § 69-

3-321, MCA, had to ascertain and declare what is in terms or in substance

contained therein, not to insert what has been omitted or to omit what has been

inserted. Farmers Alliance Mitt. Ins. Co. v. Holeman (1996), 278 Mont. 274, 924

P.2d 1315. The Commission found that as to NWE street lighting rates and

charges, Appellants were not directly affected under § 69-3-321, MCA. Indirectly,

“Orderi’jo. 7084d, FOF No.23, Doe. Seq. 6.100, Admin. Item No. 23.


or ultimately affected by NWE street lighting charges, is not directly affected by

such charges.

B. Appellants are not directly affected by the regulations,measurements, practices of NWE in its production, transmission,delivery or furnishing of street lighting, or by Appellants’ right toa clean and healthful environment.

Appellants argue that they have standing under the right to a clean and

healthfUl environment set forth in Article II, § 3 of the Montana State Constitution.

Petitioners also argue that the Commission has placed too much emphasis on

subparagraph (a) while ignoring the other subparagraphs of § 69-3-321, MCA.34 in

their District Court Brief Opposing the Commission and NWE Motions to Dismiss,

the Appellants asserted they were “directly affected” under § 69-3-321, MCA and

Article II, § 3 of the Montana State Constitution in the following manner:

“1) the HPS [high pressure sodium] luminaires use approximately twice asmuch energy as LEDs;2) Quality LED lumnaires last 3 to 5 times longer than HPS fixtures andtherefore require less maintenance;3) LED luminaires can be controlled by motion sensors to shut them offwhen not needed to minimize adverse health effects of stray night light inthe spectrum emitted by HPS, a technology that requires a ‘strike zone’ toturn them on and off, preventing use ofmotion sensors.4) HPS luminaires produce light in a spectrum that does not show color asadequately as LEDs;5) TIPS luminaires project light more unevenly onto the pavement than LEDluminaires;”35

~ Appellants’ Opening Brief, pp. 30-31~ Dcc. Seq. 10.000. p. 6.


The Commission recognizes that the right to a clean and healththl

environment is a fundamental right because it is guaranteed by the Declaration of

Rights found at Article IT, Section 3 of Montana’s State Constitution. In Montana

Environmental Information Center, et aL v. Dept. ofEnvironmental Quality,, 1999

Mt 248, 196 Mbnt. 207, 988 P.2d 1236 (1999), this Court held that the following

test bears on standing under the clean and healthful environment provision of the

State Constitution:

“(I) the complaining party must clearly allege past, present, or threatenedinjury to a property or civil right; and (2) the alleged injury must bedistinguishable from the injury to the public generally, but the injury neednot be exclusive to the complaining party.” Citing Gtyczan v. State (1997),283 Mont. 433, 442-43, 942 P.2d 112, 118. 196 Mont. pp. 218-2 19.

Complainants allege that past, present, or threatened injury to their right to a

clean and healthful environment has occurred in that they assert that LED Street

lighting consumes less energy than the currently-deployed high-pressure sodium

vapor street lights. The Commission does not, however, perceive an injury that is

distinguishable from the injury to the public generally. All members of the

Montana public appear to be similarly situated with regard to any consequences of

high-pressure sodium vapor streetlights’ electricity consumption as compared to

LED street lights’ electricity consumption; i.e., all Montanans breathe air that is

affected by electricity generation, much of which is located in Montana, which

NWE owns or purchases to meet its load obligations. All night-driving members


of the public are affected by the asserted worse color rendering of TIPS lights, by

the asserted uneven light associated with HPS, and by the inability to distinguish

objects as easily with LED lights.36

The Commission also determined that Appellants’ allegations in their

complaint did not show a reduàtion in NWE electiicityproduction if TIPS lights

were replaced with LED street lights. The Conunission stated:

“27 Moreover, the alleged reduction in street light consumption clearlywould occur at night when electric load is met primarily through base loadgenerating units as opposed to peaking units. There is no reason to assumethat these base load units would be backed off due to less street lightingconsumption. First, base load generators are more difficult to back off thanpeaking generating units. Second, utilities, including NWE, would seek tosell night-time base load generation clsewhere in order to maximize theefficient use of a sunken resource. See also, Lohmeier v. Gallatin County,2006 MT 88, 332 Mont. 39, 135 P.3d 775—(distinguishing the Lohmeierdecision from both Missoula City-County Air Pollution Control Bc!, v. Bd.OfEnvt. Review (1997), 282 Mont. 255, 937 P.2d 463, and Mont. Envtl.Info. Or. v. Dept ofEnvtl. Quality (infra) on the basis that the two citedcases involved possible increases in the amount ofpollution while Lohmeier,as is the case with this Complaint, does not allege increases in the amount ofpollution, but possible decreases in existing pollution). The Commissionfinds that Complainants have failed to show that.their request for reliefwould result in a cleaner and more healthful environment; and theCommission is not persuaded that Complainants have met the second prongof the standing test set forth in Giyczan and supported in the Mont. Envil.Info. Ctr. cited above as the asserted injury is indistinguishable from thealleged injury to the public generally.37

36 See Order No. 7084d, FOFNo. 27, Doe. Seq. 6.100, Adniin. Jtem 23

‘71d.


Appellants alleged “inadequate” service ofNWE was not, based on

Appellants’ assertions about LED street lighting, shown to be service that is

inadequate.

Appellants also appear to contend that standing is not lacking due to

Appellantsornbas lIPS Street light shining into their bedroom windo~v all night.

Appellants contend that LED motion sensing or dimming capability would make

service more adequate, a definite improvement in areas where there is little foot or

auto traffic and thus no need for continuous light.38

Motion sensing has characteristics that undermine Appellants’

characterization of LED street lighting as providing “more adequate” service.

“NWE street lights are unmetered. The utility’s Street lighting customers arebilled on the basis of the number of hours of darkness experienced on anannual basis, which in turn depends on the latitude of the Street lightlocations. For example, street lights in Havre, Montana are billed for more

• use/consumption than streetlights in Billings because Havre is north ofBillings and will experience more hours of darkness/year than Billings. Thenumber of hours of darkness for streetlights in a particular locale are

• multiplied by the known kilowatt/hour consumption rating of the streetlights in that locale. This methodology will not be available if, as Petitionerspromote, LED street lights with motion sensors should be installed. SeePetitioners’ Opposing Briet pp. 7 & 8. Motion sensors would mean that theLED street light consumption would notbe known without the individuallight being metered. Adoption of Petitioners’ proposal to replace all currentlIPS streetlights with LED street lights would require, if motion sensorswere also included, metering the new LED street lights. Metering thethousands of NWE street lights would add another substantial cost to theinitial cost ofLED luminaire installation.”39

38 Appellants’ Opening Brief, p.31.~ Commission’s Reply Brief to Petitioners’ Brief Opposing Motion to Dismiss, Doc. Seq. 12.


Appellants’ allegations do not persuasively show that HPS street lights

provide unreasonable, insufficient, unjustly discriminatory or inadequate service in

violation of* 69-3-321(1)(b) or (c), MCA.

3. Appellants have not shown that Article 11, § 16 of the MontanaCon~titution is applicable to Iheir described circumstances; i.e.Appellants have not shown that they have suffered property damage.

Appellants allege that they have standing under Article IT, § 16 of the

Montana Constitution4° which provides in relevant part, as follows:

“Section 16. The administration ofjustice. Courts of justice shall be opento every per~pp, and speedy remedy afforded for every injury of person,property, or character. . . .Right and justice shall be administered withoutsale, denial, or delay. [Emphasis added by Appellants]

Appellants apparently believe that damage to their property has occurred,

thus supporting their contention that Section 16 of the Montana State Constitution

affords them standing before the Commission. The alleged property damage is

described as follows:

“There is a definite injury to property here. Property of appellants and thosein their class are being commandeered unjustly to the tune of $61,000 amonth in Billings—triple that in NorthWestern’s system.41

Appellants allege “property” damage, but their pleading alleges only that

NWE is overcharging for the provision of street and area lighting services.

Appellants do not explain, nor do they provide any legal precedent supporting the

~° Appellants’ Opening Brief, p. 35.~ Id.


contention that payment of duly levied property taxes and street lighting district

assessments to local governments results in Appellants suffering damage to their

property. It is not the Commission’s nor is it this Court’s duty to guess what

Appellant property has been damaged nor to search for legal precedent supporting

Appellants’ conclusion that paying property taxes and lighting district fees inflicts

damage to Appellants’ property. This argument of Appellants should be dismissed

by the Court.

4. Appellants’ theories of what “directly” means should be dismissed asAppellants use out-of-record materials to argue their case.

Appellants’ attempted explanation ofwhat “directly” affected means is

solely supported by a written transcript ofAppellants’ counsel’s argument before

the Yellowstone County District Court.42 That quoted material is subject to a

Motion to Strike previously submitted to this Court by Appellees-NWp and the

Commission. The Court must ignore the out-of-record materials submitted by

Appellants as this Court review is confined to the record. § 2-4-704, MCA.

5. Appellants provide no support for their contention that standingunder the “legal equivalent of all standing provisions” doctrineaffords them standing.

42 Appellants’ Opening Brief, pp. 32-34.


Appellants’ argue that they have standing under the so-called “legal

equivalent of all standing provisions doctrine.”43 Appellants assert that energy

waste is “of overriding public moment” as to provide a basis for standing because it

meets the legal equivalent of all the standing tests. Appellants, however, rely on

•out-of-record materials/siatements to support their contention. At page 36 of their

Opening Brief, Appellants rely on “pled facts as outlined in Statement ofFacts ¶

23” as the underlying support for their contention that energy waste is of such an

overriding public moment as to provide the basis for standing. However,

Statement of Facts ¶ 23 is the subject of the Motion to Strike filed by NWE and the

Conimission referenced in Argument 4 immediately above. The purportedly

factual assertions in Appellants’ Opening Brief at ¶ 23 were not presented to the

Commission at the administrative level; rather, these allegations make their first

appearance in Appellants’ Opening Brief before this Court. The Court must ignore

the out-of-record materials submitted by Appellants as this Court review is

confined to the record. § 2-4-704, MCA.

6. Standing is not afforded simply because of asserted expertise bycomplainants.

Appellants claim standing to bring the formal complaint because two of the

Complainants, Dr. Williamson and counsel for Appellants, Mt Doty:

pp. 36~37.

Commi~sion Answer Brief 22

“have special expertise to challenge state regulation that allows utilityovercharges to fund excess use of fossil fuel when viable, cost-effective,more energy efficient alternatives are available.~~M

Appellants cite Singleton v. WuIff 428 U.S. 106, 96 S.Ct. 2868, 49 L.Ed.2d

816 (1976) as the lone support for Appellants’ contention. The Commission

contends that the holding in Singleton iá not support for Appellan±s’ standing

argument.

First, the holding that the physicians in Singleton would have standing based

upon the rights of their patients was supported by only four of the five U.S.

Supreme Court Justices.45 Justice Stevens expressed the view that the physicians

had standing to bring the action since they had a financial stake in the outcome of

the litigation and they claimed that the statute impaired their own constitutional

rights, but stated his doubt whether, apart from such two factors, there would be an

adequate basis for a federal court’s consMeration of the physicians’ arguments

based on the effect of the statute on the constitutional rights of their patients.

Justices Powell, Burger Stewart and Rehnquist dissented on the grounds that

physicians could not assert, in addition to their own rights, the constitutional rights

of their patients.

Second, the Singleton holding has been described as follows:

~ Appellants’ Opening Brief, p. 37.~ The Opinion author, Justice Blackman, was joinedin this holding by Justices Brennan, White, and Marshall.


“In addition, a physician who demonstrates that abortion finding regulationshave a direct financial impact on his practice may assert the constitutionalrights of other individuals who are unable to assert those rights themselves.(emphasis added). Diamond et a? v. Charles et aL, (1976), 476 U.S. 54, atpp. 59-60, 106 S.Ct. 1697, at p. 1705, 90 L.Ed.2d 48, at p. 60.

Appellants have not shown that others that do have standing, e.g., cities,

counties ~nd other members of NWE’s street and area lighting class, are unable to

assert their rights themselves.

Lastly, Appellants have not shown, as argued in Section V. 2. B. above, that

their alleged injury is distinguishable from the alleged injury to the public

generally. The Commission maintains that such a showing is necessary under an

assertion that Appellants have standing under the right to a clean and healthful

environment provided in Article II, § 3 of the Montana State Constitution.

Assuming (for argument purposes) the asserted degree of expertise

possessed.by two of the Complainants to be true, this does not afford Appellants

standing to file a complaint before the Commission.

7. Appellants provide no explanation or supporting legal precedentfor their assertion that Appellants are directly affected due to theexistence of a “joint rate.”

Without benefit of an explanation, or the inclusion of any supporting legal

precedent, Appellants assert that the NWB’s street lighting bill to members of the

NWE street and area lighting customer class, becomes a “joint rate” when the local


government assesses its tax statements.46 Appellants submit an additional

unsupported statement:

“Creation of a statutory partnership in which the city pays the bills for Streetlights and thus performs the unreimbursed billing service for the utility doesnot limit the right of a person affected by the bill to seek relief if the bill paidwas for an overcharge.”47

It is difficult to contest formation of a so-called “statutory partnership” when

no statute is referenced. Moreover, there is nothing in the record below to support

the assumption that when a local government assesses property taxes and lighting

district fees, it is performing a “billing service” for a utility; rather, the record

pleadings below support the conclusion that members of the NWE street and area

lighting customer class are legally responsible for the payment of street lighting

bills from NWE for the rendering of street lighting service by the utility.

The Commission respectfully asks this Court to afford no credence to

Appellants’ “joint rate,” “billing service” argument.

8. Appellants should not be found to have standing due to an allegedthird party beneficiary relationship to local government-NWEcontracts.

Appellants contend that they are third party beneficiaries of various local

government contracts with NWE.48 The Commission has addressed this issue in

Order No. 7084a:

46 Appellants’ Opening Brief, p. 32.47

481d.,p.39.


“56. Complainants also contend that they are third party beneficiaries undercity-NWE street lighting contracts. Brief in Opposition, p. Ii. NWEmaintains that~a party that is neither a party to a contract nor a third partybeneficiary of the contract lacks standing to challenge the contract. WhileMontana public utilities do execute agreements with municipalities thataddress the provision of street lighting service, all such contracts are subjectto the jurisdiction of the Commission. Moreover, no contract governs therates or charges for the provision of such service. Section 69-3-301, MCArequires any and all such rates or charges to be filed with the Commission;these filed documents are the tariff schedules referenced in FOF 53 above.Utilities cannot change the rates in the filed schedules without Commissionapproval. § 69-3-302, MCA. Public utility deviation or departure from theCommission-approved schedules is prohibited by statute. § 69-3-305, MCA.The Commission therefore concludes that any NWE contracts with the citiesof Billings or Missoula do not afford anyone as an alleged third partybeneficiary of such contracts, standing to contest NWE street lighting ratesfor such contracts do not establish the-rates and charges for the service.”

Appellants, therefore, are not third party beneficiaries of any utility-local

govermnent contract that is at issue herein, i.e., that governs the conditions of the

provision of service or the rates or charges assessed by the utility and the Court

should mie that no standing is afforded Appellants under this theory.

CONCLUSION -

The District Court’s Order and Memorandum Granting the Commission’s

Rule l2(b)(6) Motion to Dismiss and Order and Memorandum granting NWE’s

Rule I 2(b)(6) Motion to Dismiss should be affirmed. Appellants have failed to

show that they are directly affected by NWB’s street and area lighting tariff rates,

terms and conditions or that they are directly affected by any alleged inadequacies


of the tariff. Appellants must be directly affected to have standing to process a

Street lighting complaint under § 69-3-321, MCA.

Appellants have failed to show that their alleged injuries are distinguishable

from alleged injuries to the public at large and therefore do not have standing

under Article U, § 3 of the Montana Constitution.

The findings of the Commission are not clearly erroneous and are supported

by substantial evidence of record. The Commission’s interpretation and application

of laws are correct.

Dated this 2~r’ day of October, 2011.

Montana Public Service Commission

Jame(9’PaineSpecial Assistant Attorney GeneralMontana Public Service Commission1701 Prospect AvenueP.O. Box 202601Helena, MT 59620-2601


CERTIFICATE OF COMPLIANCE

I HEREBY CERTIFY that this Answer Brief of the Appellee-Montana

Public Service Commission complies with the requirements of Rule 27,

M.R.App.Pro (Form of Briefs and Other Papers), as amended. The lines in this

document are double spaced, except for indented material and footnotes, ai)d the

document is proportionately spaced with typeface Times New Roman, point size

14. The total word count is less than 10,000 words, as calculated by Microsoft

Word, excluding the table of contents, table of authorities, date and signature lines,

certificate of compliance, and certificate of mailing.

James QjaineSpecial Assistant Attorney GeneralMontana Public Service Commission


CERTIFICATE OF SERVICE

I hereby certifS’ that a true and correct copy of the foregoing Answer Brief of

Appellee-Montana Public Service Commission was duly served by mail, postage

prepaid, upon the following this 2~~day of October, 2011.

Russell L. Doty Monica Tranel3878 N. Tanager Ln. Tranel, McCarter & Morris, PLLPBillings, MT 59102-59 16 Great Northern Town Center

30 West 14th Street, Suite 204Helena, MT 59601

Jamáj. PaineSpecial Assistant Attorney GeneralMontana Public Service Commission


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