No 14672 INTHE SUPREME COURT OF THE STATE OF MONTANA 1979

- THE MONTANA POWER COMPANY, A Montana Corporation, Plaintiff and Appellant,

-vs

## - LEO CREMER, JR., et al.

## , Defendants and Respondents.

Appeal from: District Court of the Sixth Judicial District, Honorable Jack D. Shanstrom Counsel of Record: For Appellant: Jardine, Stephenson, Blewett and Weaver, Great Falls, Montana Lon Holden argued, Great Falls, Montana For Respondent: Graybill, Ostrem, Warner and Crotty, Great Falls, Montana Gregory Warner argued, Great Falls, Montana William RMorse, Absarokee, Montana For Amicus Curiae: Donald McIntyre argued, Helena, Montana

Submitted: May 4, 1979 Decided:

# JUN2

## 2 1979

Filed: 

## JUN

## 2: 

## 1379Mr. Justice Gene B. Daly delivered the Opinion of the Court.

This is an appeal by theMontana Power Company (MPC) from a judgment of theDistrict Court of the Sixth Judicial District, sitting inSweet Grass County, dismissing an eminent domain proceeding for lack of jurisdiction. MPC brought a condemnation action to acquire a permanent easement across a stripof respondents' land for the construction of a six-inch gas transmission pipeline which intotalwould extend 38.3 miles from MPC's pipelines near Greycliff, Montana, toits Big Coulee field located southeastof Ryegate, Montana. Atthe "necessity" hearing held on October 18, 1978, respondents objected tothe taking of testimony on any need for theproposed pipeline alleging that thepipeline is a "facility" under theMontana Major Facility SitingActand therefore theDepartment of Natural Resources and Conservationmust firstdetermine environmental compatibility and public need for thepipeline. Testimony was taken from John Robertson, MPC's gas and oildepartment manager and John Van Gelder, MPC's gas production and transmission manager. Robertson testified that the proposed pipeline would connect MPC's total system of gas production, distribution and transportation facilitieswith its Big Coulee gas fields and that the general purpose of the connection was toreplenish the depleted Big Coulee reserves for Lewistown, Montana, consumption. He stated that the estimated cost for construction of the pipeline was $1,693,000, and that it would be capable of transporting approximately 8,500 million cubic feet of gas per day.On December 28, 1978, the condemnation suitwas dismissed for lack of jurisdiction. The court found as a matter of 

### lawthat MPC's proposed pipeline was a "facility" under the SitingAct since it led "from or to" a "facility"

as defined by the SitingAct, section 75-20-104 (7)(c)MCA, formerly section 70-803(3)(c), R.C.M. 1947. The court also found the pipeline tobe an "addition to" MPC1spresent natural gas system. The court concluded thatMPC was barred from conducting eminent domain proceedings because it had not obtained a certificate from theMontana Board of Natural Resources and Conservation. MPC appeals from the District Court judgment dismissing the action for lack of jurisdiction and presents a question of statutory interpretation for review by this Court, viz.: Whether theMPC1sproposed gas transmission pipeline is

a "facility" as defined by theMontana Major Facility Siting Act atsection 75-20-104 (7) MCA, formerly section 70-803 (3), R.C.M. 1947? The DistrictCourt found as a matter of law that MPC1s pipeline is a facility under the Actbecause it led toor from a facility asdefined by the SitingAct. The court designates MPC1s "gas gathering", "transmission and distribution pipeline system" as a "facility" towhich the proposed linewould connect and therefore the linebecomes

a facility or associated facility. We disagree. Both parties tothis litigationhave agreed that the intentof the legislature can be determined from theplain meaning of the words used inthe statutes and it follows that the plainmeaning rule controls. This leaves no necessityto examine legislativehistory. However, theparties have nonetheless been very generous infurnishing the Courtwith claimed evidence of legislative intention. NO one really got too close toLaws of Montana 1979, Chapter 527, which amended section 75-20-104 MCA, the statuteunder consideration here, and specifically excludes natural gas pipelines from the SitingAct. This bill

### was signed by the Governor and became effective immediately on April 10, 1979. This would 

### seem to limitconsiderably the necessity for a long and involved discussion of the principles of statutory construction in this Opinion. Additionally, theMontana Department of Natural Resources and Conservation appeared by brief and argued on behalf of the statutory construction urged by appellant. The Department has not considered gas transmission lines connecting other gas transmission lines leading toor from gas 

### wellsor fields as a facilityunder the Act. This Court has previously held that in statutory construction problems great deference must be shown to the interpretation given to the statuteby the agency or officers charged with its 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 the dismissal below was based on the gas linebeing a "facility." The development of the case law inMontana with respect to the rules of statutory construction may be summarized in the following analysis: (1)Is the interpretation consistentwith the statute as a whole? (2) Does the interpretation reflect the intent of the legislature considering the plain language of the statute? (3) Is the interpretation reasonable so as to avoid absurd results? and (4) Has an agency charged with the administration of the statuteplaceda construction on the statute? Dunphy v. Anaconda Co., (19681, 151Mont. 76, 80, 438 P.2d 660, 662; Home Building & Loan Association v. Fulton (1962), 141Mont. 113, 115, 375 P.2d 312, 313; Teamster Local #45v. Cascade County School Dist. #1(1973), 162 Mont. 277, 280, 511 P.2d 339, 341; State ex rel. Cashmore v. Anderson (1972), 160Mont. 175, 184, 500 P.2d 921, 926-27; Puget Sound Power & Light Co., supra. For the pipeline inquestion to fallwithin the parameters of the SitingAct, 

### it must be 

### a pipeline designed for

or capable of transporting gas from or to a major facility. See section 75-20-104(7) (c) MCA, formerly section 70- 803(3)(c)

## , R.C.M. 1947, which states: "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 stateof the size indicated in subsection (7)(a)of this section." The facilities indicated in the referenced subsection include facilities capable of: (1)generating 50 megawatts of electricity; (2) producing 25 million cubic feet of gas per day; (3) producing 25,000 barrels of liquid hydrocarbon products per day; (4) enriching uranium minerals; (5) utilizing, refining or converting 500,000 tons of coal per year. For the gas pipeline tobe a facilityunder the SitingAct, the pipeline must come from or go toone of these types of facilities. Section 75-20-102 MCA, formerly section 70-802, R.C.M. 1947, establishes that the Siting Actis aimed atthe "location, construction and operation of power and energy conversion facilities." Likewise, the facilities described in section 75-20-104 (7)(a)MCA allclearly contemplate the siting and construction of artificial (man-made) facilities toaid inthe conversion of a 

### rawmaterial toa commercial energy product.Section 75-20-102 (7)(a)(i) MCA concerns the generation of electricity. This section contemplates that the energy product, electricity, does not occur commercially inthe natural state. Clearly, the SitingActcontemplates that artificial facilities

### willbe constructed toconvert a natural resource, such ascoal or

### water, to an energy product such aselectricity. In a similarvein section 75-20-104(7)(a)(iii) recognizes that the production of liquid hydrocarbon products requires the involvement of a sitingauthority. The extraction or gathering of the liquid hydrocarbon product is not the determinative criterion. The determinative criterion is theproduction of an energy product through a conversion process. Under section 75-20-104(7)(a) MCA, oiland gas refineries are exempted from the SitingAct. Consequently, the SitingAct is concerned only with those facilities that

areneeded toconvert a raw material, such ascoal, toa liquid hydrocarbon product. Facilities that are needed to separate naturally occurring products which may be found together, such as crude oiland associated natural gas, and facilitieswhich perform themechanical actionof extracting liquid hydrocarbon products from the earth arenotwithin the scope of this definition. Section 75-20-104 (7)(a)(iv) MCA concerns the enriching of uranium minerals. It involves the conversion of the isotopic ratio of uranium toanother isotopicratio. Simply stated, the process involves the conversion of uranium inits natural state toan energy product form which isnot commercially available inthe natural state. As in the cases of the other facilitiesdescribed above, the

common thread linking the defined facilities together is theproduction by artificialmethods of an energy product through a conversion process. Likewise, this common thread is found in section 715-20- 104(7)(a)(v)which concerns the utilizing, refining or converting of coal. As in the above-described situations,

a raw material, coal, isconverted by artificialmethods to

an energy product inthe form of heat, electricity, gas, hydrocarbon products or energy inany form forultimate public use. It is the conversion of the raw material toa commercial product that is the subject of the SitingAct. Therefore, if section 75-20-104 (7)(a)(ii) is tobe considered compatible with the remaining subsections of section 75-20-104(7) (a),as itmust be inconsidering the statute as

a whole, the gas producing facilitymust be limited to those types of facilities that convert naturally occurring material to an energy product. Gas wells and fields, asdescribed inthe DistrictCourt's order dismissing for lack of jurisdiction, 

### are not the type of facilities that convert naturally occurring gas toan energy product. Rather, the facilities aregathering and transportation of a naturally occurring energy product. Such facilities are not subject to the requirements of the SitingAct. As noted above, the SitingAct is clearly aimed atthe "location, construction and operation of power and energy conversion facilities." The key phrase is "conversion facilities." Nowhere inthe SitingActis there express authorization for the Stateto site themining or gathering activitiesof a potential applicant, except in those cases where the actual mining activity involves the conversion of the energy form. The extraction of natural gas and the ultimate transportation of the gas from its natural statetothe ultimate consumer does not involve a conversion process subject to the SitingAct. Although the gas may be sweetened, cleaned, pressurized or otherwiseprocessed tomake it suitable for burning, it isnot converted to some other form by processing through any "power or energy conversion facility." The judgment and order of the DistrictCourt is reversed and vacated, and thismatter is remanded to the trial court with instructions toproceed expeditiously with the eminent domain proceedings.

We concur: 

### 7h-&A$ f Chief Justice

Justices

Mr. Justice John C. Sheehy, deeming himself disqualified, did not participate.

### No. 14672

MONTANA POWER COMPANY

VS

# . LEO CREMER



## ----------------- DISSENT

ELERKOFSUPREMECOURI. &TATE OFMONTANA

### 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 (Tuttlev. 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), 171Mont. 97, 100, 555 P.2d 753, 754 did, stating: "ThisCourt has on several occasions considered the interpretative regulations by administrative agencies charged with the duty 

## of administering and enforcing a legislative act, for an understanding 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 constructionmay 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 legislativepolicy statement in section 70-802, R.C.M. 1947,now section 75-20-102 MCA, the opinion seizes upon the "key phrasew--"conversion facilitiesw--asa 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 inconsistentwith 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 (49U.S.C. 51671, et seq.) and by our sister states

(Seee.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.