Title: MONTANA POWER CO v CREMER

State: montana

Issuer: Montana Supreme Court

Document:

N o 14672 I N THE S U P R E M E COURT O F THE STATE O F MONTANA 19 79 - THE MONTANA P O W E R C O M P A N Y , A Montana Corporation, P l a i n t i f f and Appellant, -vs - L E O CREMER, J R . , e t a l . , Defendants and Respondents. Appeal from: D i s t r i c t Court of t h e Sixth J u d i c i a l D i s t r i c t , Honorable Jack D. Shanstrom Counsel of Record: For Appellant: Jardine, Stephenson, B l e w e t t and Weaver, Great F a l l s , Montana Lon Holden argued, G r e a t F a l l s , Montana For Respondent: Graybill, O s t r e m , Warner and Crotty, Great F a l l s , Montana Gregory Warner argued, Great F a l l s , Montana William RMorse, Absarokee, Montana For Amicus Curiae: Donald McIntyre argued, Helena, Montana Submitted: M a y 4 , 1979 Decided: JUN 2 2 1979 Filed: JUN 2: 1379 M r . J u s t i c e Gene B. Daly delivered t h e Opinion of t h e Court. This i s an appeal by t h e Montana Power Company (MPC) from a judgment of t h e D i s t r i c t Court of t h e Sixth J u d i c i a l D i s t r i c t , s i t t i n g i n Sweet Grass County, dismissing an eminent domain proceeding f o r lack of j u r i s d i c t i o n . MPC brought a condemnation a c t i o n t o acquire a per- manent easement across a s t r i p of respondents' land f o r t h e construction of a six-inch gas transmission p i p e l i n e which i n t o t a l would extend 3 8 . 3 m i l e s from MPC's p i p e l i n e s near Greycliff, Montana, t o i t s Big Coulee f i e l d located south- e a s t of Ryegate, Montana. A t t h e "necessity" hearing held on October 18, 1978, respondents objected t o t h e taking of testimony on any need f o r t h e proposed p i p e l i n e a l l e g i n g t h a t t h e p i p e l i n e i s a " f a c i l i t y " under t h e Montana Major F a c i l i t y S i t i n g A c t and therefore t h e Department of Natural Resources and Conserva- t i o n must f i r s t determine environmental compatibility and public need f o r t h e pipeline. Testimony was taken from John Robertson, MPC's gas and o i l department manager and John Van Gelder, MPC's gas production and transmission manager. Robertson t e s t i f i e d t h a t t h e proposed p i p e l i n e would connect MPC's t o t a l system of gas production, d i s t r i b u t i o n and transportation f a c i l i t i e s with i t s Big Coulee gas f i e l d s and t h a t the general purpose of t h e connection was t o re- plenish t h e depleted Big Coulee reserves f o r Lewistown, Montana, consumption. H e s t a t e d t h a t t h e estimated c o s t f o r construction of t h e p i p e l i n e w a s $1,693,000, and t h a t it would be capable of transporting approximately 8,500 m i l l i o n cubic f e e t of gas per day. On December 28, 1978, t h e condemnation s u i t was d i s - missed f o r lack of j u r i s d i c t i o n . The c o u r t found a s a matter of l a w t h a t MPC's proposed p i p e l i n e was a " f a c i l i t y " under t h e S i t i n g A c t s i n c e it l e d "from o r t o " a " f a c i l i t y " as defined by t h e S i t i n g A c t , section 75-20-104 (7) (c) MCA, formerly s e c t i o n 70-803(3)(c), R.C.M. 1947. The c o u r t a l s o found t h e p i p e l i n e t o be an "addition t o " MPC1s present n a t u r a l gas system. The c o u r t concluded t h a t M P C was barred from conducting eminent domain proceedings because it had n o t obtained a c e r t i f i c a t e from t h e Montana Board of Natural Resources and Conservation. MPC appeals from t h e D i s t r i c t Court judgment dismissing t h e a c t i o n f o r lack of j u r i s d i c t i o n and presents a question of s t a t u t o r y i n t e r p r e t a t i o n f o r review by t h i s Court, v i z . : Whether t h e MPC1s proposed gas transmission p i p e l i n e i s a " f a c i l i t y " a s defined by t h e Montana Major F a c i l i t y S i t i n g Act a t section 75-20-104 (7) MCA, formerly s e c t i o n 70-803 ( 3 ) , R.C.M. 1947? The D i s t r i c t Court found a s a matter of law t h a t MPC1s p i p e l i n e i s a f a c i l i t y under t h e A c t because it l e d t o o r from a f a c i l i t y a s defined by t h e S i t i n g A c t . The c o u r t designates MPC1s "gas gathering", "transmission and d i s t r i - bution p i p e l i n e system" as a " f a c i l i t y " t o which t h e pro- posed l i n e would connect and therefore t h e l i n e becomes a f a c i l i t y o r associated f a c i l i t y . W e disagree. Both p a r t i e s t o t h i s l i t i g a t i o n have agreed t h a t t h e i n t e n t of t h e l e g i s l a t u r e can be determined from t h e p l a i n meaning of t h e words used i n the s t a t u t e s and it follows t h a t t h e p l a i n meaning r u l e controls. This leaves no neces- s i t y t o examine l e g i s l a t i v e h i s t o r y . However, t h e p a r t i e s have nonetheless been very generous i n furnishing t h e Court with claimed evidence of l e g i s l a t i v e i n t e n t i o n . NO one r e a l l y g o t t o o c l o s e t o Laws of Montana 1979, Chapter 527, which amended s e c t i o n 75-20-104 MCA, t h e s t a t u t e under consideration here, and s p e c i f i c a l l y excludes n a t u r a l gas p i p e l i n e s from t h e S i t i n g Act. This b i l l w a s signed by t h e Governor and became e f f e c t i v e immediately on A p r i l 1 0 , 1979. This would seem t o l i m i t considerably t h e n e c e s s i t y f o r a long and involved discussion of t h e p r i n c i p l e s of s t a t u t o r y construction i n t h i s Opinion. Additionally, t h e Montana Department of Natural Re- sources and Conservation appeared by b r i e f and argued on behalf of t h e s t a t u t o r y construction urged by appellant. The Department has n o t considered gas transmission l i n e s connecting o t h e r gas transmission l i n e s leading t o o r from gas w e l l s o r f i e l d s a s a f a c i l i t y under t h e A c t . This Court has previously held t h a t i n s t a t u t o r y construction problems g r e a t deference must be shown t o t h e i n t e r p r e t a t i o n given t o t h e s t a t u t e by t h e agency o r o f f i c e r s charged with i t s administration. Department of Revenue v. Puget Sound Power and Light Co. (1978), Mont. , 587 P.2d 1282, 1286, 35 St.Rep. 1368, 1372. This has more than usual import here as t h e dismissal below was based on t h e g a s l i n e being a " f a c i l i t y . " The development of t h e case law i n Montana with r e s p e c t t o t h e r u l e s of s t a t u t o r y construction may be summarized i n t h e following a n a l y s i s : (1) Is t h e i n t e r p r e t a t i o n consis- t e n t with t h e s t a t u t e a s a whole? ( 2 ) Does t h e i n t e r p r e - t a t i o n r e f l e c t t h e i n t e n t of t h e l e g i s l a t u r e considering t h e p l a i n language of t h e s t a t u t e ? ( 3 ) Is t h e i n t e r p r e t a t i o n reasonable s o as t o avoid absurd r e s u l t s ? and ( 4 ) Has an agency charged with t h e administration of t h e s t a t u t e placed a construction on t h e s t a t u t e ? Dunphy v. Anaconda Co., (19681, 151 Mont. 76, 80, 438 P.2d 660, 662; Home Building & Loan Association v. Fulton (1962), 1 4 1 Mont. 113, 115, 375 P.2d 312, 313; Teamster Local #45 v. Cascade County School D i s t . #1 (1973), 162 Mont. 277, 280, 511 P.2d 339, 341; S t a t e ex rel. Cashmore v. Anderson (1972), 160 Mont. 175, 184, 500 P.2d 921, 926-27; Puget Sound Power & Light Co., supra. For t h e p i p e l i n e i n question t o f a l l within t h e param- eters of t h e S i t i n g Act, it must be a p i p e l i n e designed f o r o r capable of t r a n s p o r t i n g gas from o r t o a major f a c i l i t y . See s e c t i o n 75-20-104(7) ( c ) MCA, formerly s e c t i o n 70- 803 (3) ( c ) , R.C.M. 1947, which s t a t e s : "Each p i p e l i n e and associated f a c i l i t i e s de- signed f o r o r capable of t r a n s p o r t i n g gas, water, o r l i q u i d hydrocarbon products from o r t o a f a c i l i t y located within or without t h i s s t a t e of t h e s i z e i n d i c a t e d i n subsection (7) (a) of t h i s section." The f a c i l i t i e s i n d i c a t e d i n t h e referenced subsection i n - clude f a c i l i t i e s capable o f : (1) generating 50 megawatts of e l e c t r i c i t y ; ( 2 ) producing 25 m i l l i o n cubic f e e t of g a s p e r day; (3) producing 25,000 b a r r e l s of l i q u i d hydrocarbon products p e r day; ( 4 ) enriching uranium minerals; (5) u t i - l i z i n g , r e f i n i n g o r converting 500,000 tons of c o a l per year. For t h e gas p i p e l i n e t o be a f a c i l i t y under t h e S i t i n g Act, t h e p i p e l i n e must come from o r go t o one of t h e s e types of f a c i l i t i e s . Section 75-20-102 MCA, formerly s e c t i o n 70-802, R.C.M. 1947, e s t a b l i s h e s t h a t t h e S i t i n g A c t is aimed a t t h e "lo- c a t i o n , construction and operation of power and energy conversion f a c i l i t i e s . " Likewise, t h e f a c i l i t i e s described i n s e c t i o n 75-20-104 (7) (a) MCA a l l c l e a r l y contemplate t h e s i t i n g and construction of a r t i f i c i a l (man-made) f a c i l i t i e s t o a i d i n t h e conversion of a r a w m a t e r i a l t o a commercial energy product. Section 75-20-102 (7) (a) (i) MCA concerns t h e generation of e l e c t r i c i t y . This s e c t i o n contemplates t h a t t h e energy product, e l e c t r i c i t y , does n o t occur commercially i n t h e n a t u r a l s t a t e . Clearly, t h e S i t i n g A c t contemplates t h a t a r t i f i c i a l f a c i l i t i e s w i l l be constructed t o convert a n a t u r a l resource, such a s c o a l o r w a t e r , t o an energy product such a s e l e c t r i c i t y . I n a s i m i l a r v e i n s e c t i o n 7 5 - 2 0 - 1 0 4 ( 7 ) ( a ) ( i i i ) recog- n i z e s t h a t t h e production of l i q u i d hydrocarbon products r e q u i r e s t h e involvement of a s i t i n g a u t h o r i t y . The extrac- t i o n o r gathering of t h e l i q u i d hydrocarbon product is n o t t h e determinative c r i t e r i o n . The determinative c r i t e r i o n i s t h e production of an energy product through a conversion process. Under s e c t i o n 75-20-104(7)(a) MCA, o i l and gas r e f i n e r i e s are exempted from t h e S i t i n g A c t . Consequently, t h e S i t i n g A c t i s concerned only with those f a c i l i t i e s t h a t a r e needed t o convert a raw m a t e r i a l , such a s c o a l , t o a l i q u i d hydrocarbon product. F a c i l i t i e s t h a t a r e needed t o s e p a r a t e n a t u r a l l y occurring products which may be found together, such a s crude o i l and associated n a t u r a l gas, and f a c i l i t i e s which perform t h e mechanical a c t i o n of e x t r a c t i n g l i q u i d hydrocarbon products from t h e e a r t h a r e n o t w i t h i n t h e scope of t h i s d e f i n i t i o n . Section 75-20-104 (7) ( a ) ( i v ) MCA concerns t h e enriching of uranium minerals. I t involves t h e conversion of t h e i s o t o p i c r a t i o of uranium t o another i s o t o p i c r a t i o . Simply s t a t e d , t h e process involves t h e conversion of uranium i n i t s n a t u r a l s t a t e t o an energy product form which i s n o t commercially a v a i l a b l e i n t h e n a t u r a l state. A s i n t h e cases of t h e o t h e r f a c i l i t i e s described above, t h e common thread l i n k i n g the defined f a c i l i t i e s together i s t h e production by a r t i f i c i a l methods of an energy product through a conversion process. Likewise, t h i s common thread i s found i n s e c t i o n 715-20- 1 0 4 (7) ( a ) (v) which concerns t h e u t i l i z i n g , r e f i n i n g o r converting of coal. A s i n t h e above-described s i t u a t i o n s , a raw material, coal, i s converted by a r t i f i c i a l methods t o an energy product i n t h e form of heat, e l e c t r i c i t y , gas, hydrocarbon products o r energy i n any form f o r ultimate public use. I t i s t h e conversion of t h e raw m a t e r i a l t o a commercial product t h a t i s t h e s u b j e c t of t h e S i t i n g A c t . Therefore, i f s e c t i o n 75-20-104 (7) ( a ) (ii) i s t o be con- sidered compatible with t h e remaining subsections of s e c t i o n 75-20-104(7) ( a ) , as it must be i n considering t h e s t a t u t e a s a whole, t h e gas producing f a c i l i t y must be limited t o those types of f a c i l i t i e s t h a t convert n a t u r a l l y occurring mate- r i a l t o an energy product. Gas wells and f i e l d s , a s de- scribed i n t h e D i s t r i c t Court's order dismissing f o r lack of j u r i s d i c t i o n , are not t h e type of f a c i l i t i e s t h a t convert n a t u r a l l y occurring gas t o an energy product. Rather, t h e f a c i l i t i e s a r e gathering and t r a n s p o r t a t i o n of a n a t u r a l l y occurring energy product. Such f a c i l i t i e s are n o t s u b j e c t t o t h e requirements of t h e S i t i n g A c t . A s noted above, t h e S i t i n g Act i s c l e a r l y aimed a t t h e "location, construction and operation of power and energy conversion f a c i l i t i e s . " The key phrase i s "conversion f a c i l i t i e s . " Nowhere i n t h e S i t i n g A c t is t h e r e express authorization f o r t h e S t a t e t o site t h e mining o r gathering a c t i v i t i e s of a p o t e n t i a l applicant, except i n those cases where t h e a c t u a l mining a c t i v i t y involves t h e conversion of t h e energy form. The e x t r a c t i o n of n a t u r a l gas and t h e ultimate transportation of t h e gas from i t s n a t u r a l s t a t e t o t h e u l t i m a t e consumer does n o t involve a conversion process s u b j e c t t o t h e S i t i n g Act. Although t h e gas may be sweetened, cleaned, pressurized o r otherwise processed t o make it s u i t a b l e f o r burning, it i s n o t converted t o some o t h e r form by processing through any "power o r energy conversion f a c i - l i t y . " The judgment and order of t h e D i s t r i c t Court i s re- versed and vacated, and t h i s matter i s remanded t o t h e t r i a l c o u r t with i n s t r u c t i o n s t o proceed expeditiously with t h e eminent domain proceedings. W e concur: 7 h - & A $ f Chief J u s t i c e J u s t i c e s M r . J u s t i c e John C. Sheehy, deeming himself d i s q u a l i f i e d , d i d n o t p a r t i c i p a t e . No. 1 4 6 7 2 MONTANA POWER COMPANY V S . LEO CREMER ----------------- D I S S E N T ELERKOFSUPREMECOURI. &TATE OF MONTANA Mr. Justice Daniel J. Shea dissents: I dissent because this natural gas pipeline plainly and properly comes within the definition of a "facility" under the Montana Major Facility Siting Act. Section 70-803 (3) (c) , R.C.M. 1947, now section 75-20- 104(7) (c) MCA provides: "'Facility' means: " (c) each pipeline and associated facilities designed for, or capable of, transporting gas, water, or liquid hydrocarbon products from or to a facility located within or without this state of the size indicated in subsection ( 3 ) (a) of this section; . . ." Section 70-803(3) (a) (ii) , R.C.M. 1947, now section 75-20- 104 (7) (a) (ii) MCA provides: "'Facility' means: "(a) each plant, unit, or other facility and associated facilities, except for oil and gas refineries, "(ii) designed for, or capable of, producing twenty-five million (25,000,000) cubic feet of gas per day or more, or any addition thereto having an estimated cost in excess of two hundred fifty thousand dollars ($250,000), or . . ." The question, then, is whether the pipeline to or from which the pipeline would lead is designed for or capable of "producing" 25 million cubic feet of gas per day or more. The Greycliff connection is tied in with MPC's total gas production system which is capable of producing approximately 290,000 million cubic feet of gas per day. Therefore, the proposed pipeline leads from or to a facility capable of producing in excess of 25 million cubic feet of gas per day. Preliminarily, the majority opinion noted that section 70-20-104 MCA was recently amended so as to exclude natural gas pipelines from the Siting Act. This fact, according to the opinion, "would seem to limit considerably the necessity for . . . statutory construction." In this case, we are concerned with the Act as it existed before the 1979 amendment. If anything, the amendment indicates that the legislature sought to change existing law (Tuttle v. Morrison-Knudsen Co. (1978), Mont. , 580 P.2d 1379, 1382, 35 St.Rep. 864, 869; Montana Milk Control Bd. v. Community Creamery Co. (1961), 139 Mont. 523, 526, 366 P.2d 151, 152), and the change is effective only after the date of the amendment. Section 43-510, R.C.M. 1947, now section 1-2-203 MCA. The opinion regards the fact that the Department has not considered gas lines connecting other gas lines to be "facilities" as deserving of "great deference". Dept. of Rev. v. Puget Sound Power and Light Co., supra. The cited case stated, but did not apply, this notion of statutory construction. However, Doe v. Colburg (1976), 171 Mont. 97, 100, 555 P.2d 753, 754 did, stating: "This Court has on several occasions considered the interpretative regulations by administrative agencies charged with the duty of administering and enforcing a legislative act, for an under- standing of the provisions that must be carried out. (Cites omitted. ) "While such administrative interpretations are not binding on the courts, they are entitled to respectful consideration." (Emphasis added.) Here, no interpretive rulings on the Department's treatment of pipeline-to-pipeline facilities exist. Surely, the Department's inaction cannot be viewed as the legal equivalent to the promulgation of an interpretive ruling. The opinion then declares that Montana's rules of statutory construction may be summarized in a four-part analysis. This analysis neglects to mention the fundamental rule that legislative intent must first be determined from the plain meaning of the words used. Section 93-401-15, R.C.M. 1947, now section 1-2-101 MCA; Dunphy, supra; Teamsters Local #45, supra; Cashmore, supra. Instead, the opinion reverses the inquiry and asks, "does the interpretation reflect the intent of the legislature considering the plain language of the statute?" In short, does our opinion find support in the statute? Turning to the legislative policy statement in section 70-802, R.C.M. 1947, now section 75-20-102 MCA, the opinion seizes upon the "key phrasew--"conversion facilitiesw--as a statement of the Act's limited coverage. Even a cursory reading of the provision demonstrates that the legislative concern was not restricted to energy conversion facilities, but was generally aimed at furthering this State's policy of maintaining and improving "a clean and healthful environment . . . to protect the environmental life support system from degradation and prevent unreasonable depletion and degradation of natural resources." Section 70-802, supra. It is not inconsistent with this policy to impose siting requirements regulating the location, safety, construction and maintenance of gas pipelines. Indeed, the need for such legislation has prompted enactment of similar laws both by the United States Congress (49 U.S.C. 51671, et seq.) and by our sister states (See e.g., Wash.Rev.Code 580.50.010, et seq., and 0r.Rev.Stat. 5757.039.) To bolster its decision the Court attempts to trace a "common thread linking the defined facilities together" and determines that the common denominator is the conversion process necessary to produce the other enumerated energy forms. It appears the Court went too far in its search for commonality. For example, in discussing the definition of liquid hydrocarbon producing facilities, section 75-20-104 (7) (a) (iii) , it is stated that only such facilities that convert a raw material, such as coal, to a liquid hydrocarbon product are included. This totally unsolicited statement is not supported by the legislative history of section 75-20-104 (7) (a) (iii) . The 1975 Legislature specifically deleted any reference to gasification or liquefaction facilities for the obvious purpose of broadening the scope of the definition. If there is a "common thread" linking the facilities subject to the siting requirements of the Act, it is simply the potential environmental impact posed by each of the enumerated facilities. The District Court ruled correctly that the proposed gas pipeline is a "facility" and therefore subject to the requirements of the Major Facility Siting Act. Under the Act, the utility cannot conduct eminent domain proceedings until it has obtained a certificate of environmental compatibility and public need from the Department of Natural Resources and Conservation. Therefore, I would affirm the District Court order dismissing eminent domain prosedings.