No. 85-447 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

JOHN L. HOLLOW, 

Plaintiff 

STATE OF MONTANA, MONTANA ECONOMIC DEVELOPMENT 

BOARD, D. PATRICK McKITTRICK, YVONNE SNIDER, 

JEREMIAH R. SULLIVAN, G. STEVEN BROWN, KAREN 

R. LOCKE, JOHN C. ORTH, JACKSON L. SCHUTTE, 

as members of said Montana Economic Development 

Board, MONTANA STATE DEPARTMENT OF COMMERCE, 

and KEITH COLBO, Director of said Department 

of Commerce, 

Defendants 

ORIGINAL PROCEEDING: 

COUNSEL OF RECORD: 

For Plaintiff: 

Hull & Sherlock; Jeffrey M. Sherlock, 

Helena, Montana, Argued 

For Defendants: 

Dorsey & Whitney; Mae Nan Ellingson, 

Great Falls, Montana, Argued 

Submitted: March 12, 1986 

Decided: August 8, 1986 

Filed: 3 'YB6 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

In this case we determine and hold that the provisions 

of § 17-6-308, MCA, which permit the use of in-state 

investment fund monies ($ 17-6-306, MCA) derived from 

taxation to guarantee loans or bonds of private individuals 

or private entities either directly or through the capital 

reserve account (S 17-5-1515, MCA) or through the economic 

development guaranty fund ( 17-5-1520, MCA) are 

unconstitutional from the viewpoint of our state 

constitution. 

I. 

This is an original proceeding in this Court, brought by 

John L. Hollow, a citizen, resident of Helena, Montana, and 

taxpayer, voter and property owner in this state. His action 

is brought under the Uniform Declaratory Judgments Act (5 

27-8-101, MCA, et seq.) for the purpose of obtaining from 

this Court a declaration that certain provisions of S.B. 349, 

Ch. 640, Laws of Montana (1985), enacted by the 49th 

Legislative Assembly are invalid as offending the State 

Constitution. We ordered responses from counsel representing 

the defendants, which responses were served and filed. 

Thereafter, oral argument was had before the Court on March 

12, 1986 concerning the contentions raised by the complaint 

and the responses. 

There is no dispute between the parties as to whether 

this Court has jurisdiction to proceed, but in an original 

proceeding, we must, of course, find jurisdiction under our 

granted powers. To be sure about it, the same facts and 

factors that excited our acceptance of original jurisdiction 
and caused us to find standing for the taxpayer in Grossman 

v. State Department of Natural Resources (Mont. 1984), 682 

P.2d 1319, 41 St.Rep. 804, are present in this case. Here 

Hollow challenges the constitutionality of various aspects of 

the in-state investment program; the issuance of bonds by the 

state under the program is delayed because underwriters or 

investors who would purchase bonds require a final court 

resolution of the constitutional issues involved; the program 

involves major segments of the state's population, and has 

great impact upon its economy; requiring the case to proceed 

first to the District Court and then here on appeal for a 

final resolution will require a lapse of time almost 

intolerable; and the proceedings here are designed to obtain 

a final judgment on the validity of the bonds which might be 

issued thereunder, so if valid, the bonds would be 

marketable. As we stated in Grossman, the issues here are 

fairly stated, fully explored and vigorously contended so 

that we have a justiciable controversy suitable for final 

resolution. Therefore we assume jurisdiction. 

The Montana Economic Development Board was created by § 

2-15-1805, MCA; its individual members at the time of the 

complaint here are the defendants McKittrick, Snider, 

Sullivan, Brown, Locke, Orth, and Schutte. The Board is 

administratively attached to the Montana Department of 

Commerce, an administrative agency of the state which is 

directed by the defendant Colbo. The Board is purporting to 

and intends to issue bonds within the limits prescribed by 

S.B. 349 (the title of the legislation in the legislature; we 

will refer as we proceed in this discussion to pertinent 

parts of S.B. 349 as the said parts are now enumerated in the 
code sections of the Montana Codes Annotated). The Board 

adopted a resolution on August 8, 1985 declaring its 

intention to issue the total principal amount of bonds 

permitted under the legislation. However, the Board has been 

advised by its bond counsel that there are several 

constitutional issues raised by the legislation which have 

not been specifically addressed by this Court in prior 

decisions and that a final resolution of those issues would 

be required by the investors to effectuate the sale of bonds 

issued by the Board. 

111. 

A short statement of what S.B. 349 accomplished is that 

the legislation authorized the Board to utilize the in-state 

investment fund to guarantee loans or bonds otherwise 

authorized to be made or issued by the Board under the 

provisions of the Montana Economic Development Bond Act, the 

Municipal Finance Consolidation Act, or the Montana Health 

Facility Authority Act; and to make and agree to make loans 

from the in-state investment fund to the capital reserve 

account and guarantee funds which secure certain bonds issued 

by the Board. 

While that short statement may suffice to advise the 

reader of the effect of the legislation, it does not begin to 

lead the reader through the maze of statutory provisions 

attending the activities of the Board. These we must explore 

in some detail for background to our decision here. 

The legislature adopted the "Montana Economic 

Development Bond Act of 1983" (5 17-5-1501, MCA, et seq.) for 

the purposes of promoting the general welfare of the people 

of the state, to increase job opportunities, and to retain 

existing jobs by making available funds for industrial, 
commercial, agricultural and other uses for economic 

development. The Board was given power to issue bonds and 

notes for "projects" and "major projects" (S 17-5-1506, MCA) 

and to maintain necessary accounts (S 17-5-1514, MCA) . One 

of such accounts is the capital reserve account, of which 

more later. 

The Board was also given power to engage in a project 

guarantee program (S 17-5-1519, MCA) and to guarantee 

payments required by a loan, lease, or other credit 

arrangement for any project funded as authorized. 

Particularly with respect to its guarantee program, the Board 

was also empowered to create an economic development 

guarantee fund (S 17-5-1520, MCA). 

IV. 

The capital reserve account established by the Board is 

provided in 5 17-5-1515, MCA. It consists of funds 

appropriated and made available by the state for the purposes 

of the account, proceeds from the sale of notes or bonds to 

the extent provided in the resolutions or indentures of the 

Board authorizing their issuance and such other funds as may 

be available from other sources. 

Funds held in the capital reserve account must be used 

solely for the payment of principal of or interest on bonds 

secured by the account and must be maintained in a minimum 

amount sufficient to meet obligations of principal, interest 

and redemption premiums and debt service for such bonds and 

notes. 

No bonds issued by the Board, and funded through the 

capital reserve account are a debt, liability or obligation 

of the faith and credit of the sta.te, but are payable solely 

from the revenue or assets of the Board (S 17-5-1523, MCA). 
Nonetheless, the governor must include in the executive 

budget submitted to the legislature any sums required to 

restore the capital reserve account to the sum of minimum 

capital reserve requirements (S 17-5-1516, MCA) . This latter 

provision is denoted the "moral obligation" clause. 

v. 

The Board is further empowered to establish a project 

guarantee program (S 17-5-1519, MCA). The Board may make 

commitments to guarantee payments required by a loan, lease 

or other credit arrangement for any project funded under the 

Montana Economic Development Bond Act, or under industrial 

development projects as outlined in § 90-5-101, MCA, et seq. 

To fund this program, the Board is authorized to create an 

economic guarantee fund (S 17-5-1520, MCA) . It consists of 

insurance fees, premiums and other revenue and assets as the 

Board considers necessary to comply with any contract or 

agreement entered into by the Board and of borrowings up to 

$7.5 million from any available state funds. 

Funds in the Economic Development Guarantee Fund must be 

used to satisfy any claim resulting from a defaulted loan 

lease or any other credit agreement. Once again the credit 

of the state is not pledged with respect to this fund but the 

governor is required to include in the executive budget 

submitted to the legislature sums required to restore the 

economic guarantee fund to the minimum reserve requirements, 

which is an amount not in excess of the aggregate annual 

payments due under the loans, leases, or other credit 

agreements guaranteed by the Board ((SS 17-5-1520 (3 , (4 , 

MCA) . 

The projects for which the funds produced by Economic 

Development Bonds may be used are broadly defined. A "major 
project" is one whose cost or appraised value exceeds 

$800,000 (5 17-5-1503 (6) , MCA) . Otherwise a "project" means, 

under S 17-5-1503(7), MCA, those projects outlined in S 

90-5-101 (6) , MCA, which follow: 

"Project" means any land; any building or other 

improvement; and any other real or personal 

properties deemed necessary in connection 

therewith, whether or not now in existence, which 

shall be suitable for use for commercial, 

manufacturing, agricultural, or industrial 

enterprises; recreation or tourist facilities; 

local, state, and federal governmental facilities; 

multifamily housing, hospitals, long-term care 

facilities, or medical facilities; small-scale 

hydroelectric production facilities with a capacity 

of 50 megawatts or less; and any combination of 

these projects. 

VI. 

The provisions of S.B. 349 that create constitutional 

problems, as we view it, arise out of the use of the in-state 

investment fund. 

The 1972 Montana Constitution, in Art. VIII, 5 13, 

directs that the state engage in a unified investment 

program. Accordingly, 5 17-6-201, MCA, directs that public 

funds be administered by the Board of Investments and the 

Montana Economic Development Board. The power of the Board 

of Economic Development, however, is limited to investment of 

the in-state investment fund (5 17-6-201 (4), MCA) . The Montana in-state investment fund is derived partly 

from the taxation of the severance of coal in Montana. The 

Montana in-state investment fund consists of (1) 25% of the 

revenue deposited after June 30, 1983 into the permanent coal 

tax trust fund established in S 17-6-203 (5), MCA; (2) the 

principal payments on all investments made from the Montana 

in-state investment fund; and, (3) 15% of the annual income 

and earnings on the Montana in-state investment fund 
appropriated to the coal severance permanent fund by § 

17-5-704 (2) , MCA. (Section 17-6-306, MCA. ) 

At this point, it is necessary to set out in full the 

perimeters of 5 17-6-308, MCA, respecting authorized 

investments of the in-state investment fund. The statute 

follows: 

(1) The Montana in-state investment fund must be 

invested as authorized by rules adopted by the 

board. For purposes of this section, "investment" 

includes the guaranty of loans or bonds in 

consideration for a fee, in lieu of the actual 

acquisition of such loans or bonds. 

(2) The board may use the in-state investment fund 

to guarantee loans or bonds issued under the 

provisions of 17-5-1501 through 17-5-1529, Title 

17, chapter 5, part 16, or Title 90, chapter 7. 

Each guaranty must be given in consideration of a 

fee. The fees must be paid to the board. The 

guaranty must provide directly or by separate 

agreement that the board is fully subrogated to the 

rights of the obligee under the loan or bond. The 

board shall by rule establish the maximum ratio 

between guaranty funds available and loans or bonds 

to be guaranteed. The board may covenant in bond 

issues to maintain such ratio. Unless bonds issued 

to finance a project are secured by a common 

capital reserve account and a common guaranty fund, 

the maximum amount of the guaranty authorized by 

this section may not exceed $3,000,000 with respect 

to the bonds or loans to finance the project. 

(3) The board may make loans from the in-state 

investment fund to the capital reserve account 

created pursuant to 17-5-1515 and the guaranty fund 

created pursuant to 17-5-1520 to establish balances 

or restore deficiencies therein. The board may 

agree in connection with the issuance of bonds or 

notes secured by such account or fund to make such 

loans. Loans must be on such terms and conditions 

as the board determines and must be repaid from 

revenues of the board realized from the exercise of 

its powers under 17-5-1501 through 17-5-1529, 

subject to the prior pledge of the revenues to the 

bonds and notes. 

Under S.B. 349, the legislature in 1985 amended 

subdivision (1) of 17-6-308, MCA, to provide that an 

"investment" includes the guaranty of loans or bonds in 

consideration of a fee, in lieu of the actual acquisition of 
such loans or bonds. Such a provision did not exist prior to 

the amendment to define an investment. 

The concept that undertaking to guaranty the private 

debt or obligation of another is an "investment," is 

peculiar, to put it mildly. It is akin to co-signing a note 

at the bank for a friend, which as Shakespeare noted, "oft 

loses both itself and friend." The defendants contend that 

guaranties on loans authorized under the statutes here are 

nothing more than additional types of investments and that 

the act of investing by guaranty does not create a debt on 

the part of the state. They rely on an informal opinion of 

the Montana Attorney General to that effect, and on 

provisions of $ 17-6-308, MCA that the guaranty must be given 

in consideration of a fee; that it must provide that the 

Board is subrogated to the rights of the obligee; that there 

must be a maximum ratio between guaranty funds available and 

loans to be guarantied; that the maximum amount of the 

guaranty may not exceed $3 million in any project unless the 

bond is secured by a common guaranty fund and that the loans 

must be repaid from the revenues of the Board. 

An "investment" is defined in Webster's New Collegiate 

Dictionary (1981 ed.) as "the outlay of money usually for 

income or profit; a capital outlay." When an investment is 

by guaranty, the outlay will come when the project has failed 

or the income is lost. A guarantor agrees to answer for the 

debt, default or miscarriage of another. Section 28-11-101, 

MCA . 

The provisions of $ 17-6-308, MCA, which permits the 

Board to establish a maximum ratio between guaranty funds 

available and loans to be guarantied have prompted the Board 
to adopt by resolution an administrative rule, A.R.M. S 

8.97.413, which reads in pertinent part: 

(2) The total principal amount of loans guarantied 

under A.R.M. 8.97.410 and bonds guarantied under 

17-6-308(1), MCA, and of outstanding loans and 

obligations to make loans to the Capital Reserve 

Account and Guaranty Reserve Account shall not 

exceed, as of the date of the guaranty, loan or 

obligation, eight times the Guaranty and Loan Base. 

(3) The Guaranty and Loan Base shall, at the time 

of determination, be an amount equal to 25% of the 

current market value of all assets of the board in 

the Investment Fund. 

Thus, the potential liability of the state is for the 

full amount of all guaranties made by the Board which can be 

as great as two times the amount of the in-state investment 

fund. In a worst case scenario, guaranty holders may look to 

the state for full satisfaction for when "the legislature 

validly acts to establish a debt under Art. VIII, S 8, that 

indebtedness becomes a state obligation extending over the 

life of the indebtedness, and every succeeding legislative 

assembly has an unavoidable duty to provide for it, in the 

manner required by the authorizing law." Grossman, 682 P.2d 

at 1332, 41 St.Rep. at 819-20. 

The strictures which protect the credit of the state 

with respect to bonds issued by the Board are not present 

with respect to the use of the in-state investment funds 

under S 17-6-308, MCA. With respect to bonds, S 17-5-1523, 

MCA, provides that such obligations do not constitute a debt, 

liability, obligation or pledge of the faith or credit of the 

state. To the contrary, under S 17-6-308, MCA, the Board may 

use the in-state investment fund to pay obligations of 

guaranty of loans or bonds. In so doing, the Board would 

apply that portion of the in-state investment fund that 

derives from 25% of the coal severance tax revenues provided 
in S 17-6-306, MCA. When such funds are used to satisfy 

guaranties of private debts or obligations its use offends 

Art. VIII, § 1 of the Montana Constitution which provides 

taxes shall be levied by general laws for public purposes; 

Art. V, S ll(5) that no appropriation shall be made for 

industrial or benevolent purposes to any private individual 

or private corporation not under the control of the state; 

and Art. VIII, S 13 (1) , providing for a unified investment 

program, insofar as S 17-6-308, MCA allows guaranties of 

private obligations as permissible investments. See 

Veteran's Welfare Commission v. V.F.W. and D.A.V. (1963), 141 

Mont. 501, 379 P.2d 107. 

In like manner, the provisions of subdivision (3) of § 

17-6-308, MCA, are constitutionally impermissible. Under 

that subdivision, the Board may make loans from the in-state 

investment funds to the capital reserve account we have 

described above and the economic guaranty fund also described 

above to establish balances or restore deficiencies therein. 

The loans are repayable from revenues of the Board realized 

from the exercise of its power and the issuance of bonds but 

subject to the prior pledge of the revenues to the bonds and 

the notes. 

As we noted, under § 17-5-1523, MCA, the credit of the 

state is not pledged to secure the bonds issued by the Board. 

Section 17-6-308(3), MCA, sidesteps that provision by 

providing that the Board may agree in connection with the 

issuance of bonds to make loans out of the in-state 

investment fund to the capital reserve account and the 

economic guaranty fund. The effect is, without the further 

action of the legislature, that tax monies derived from the 

coal severance tax will be loaned from the in-state 
investment fund and used to secure the obligations of the 

bonds. Such a procedure impermissibly offends the same 

provisions of the constitution we have referred to above. 

This Court is aware that in Huber v. Groff (1976) , 171 

Mont. 442, 558 P.2d 1124, we held that the credit of the 

state was not pledged under the provisions of the Montana 

Housing Act of 1975. That act provides that the Board of 

Housing may issue bonds for the purchase of loans used for 

housing from banks and other financial institutions. We were 

careful to point out in Huber, however, that the act 

specifically said that the credit of the state was not 

pledged as security of the bonds so issued, even though there 

was a "moral commitment" much as we have at the case at bar, 

that the governor would request the legislature to 

appropriate necessary funds to supplement the reserve 

accounts. That avenue of redress for deficiencies, if any 

exist, in the capital reserve account and the economic 

development bond fund is still open under this decision. 

What we do not and cannot condone is the direct use of tax 

monies by legislative provision which in effect directly 

pledges the credit of the state to secure the bonds involved 

in this case. 

VI . 

There are a number of other issues raised by Hollow in 

his complaint, but what we have said foregoing is sufficient 

to demonstrate that the use of the in-state investment fund 

as provided in S 17-6-308, MCA, is constitutionally 

impermissible. We will not undertake to discuss the other 

issues raised by Hollow. 

This opinion shall be and constitute a declaratory 

judgment in favor of Hollow to the effect that the use of 
in-state investment funds to guaranty loans or to make loans 

to the capital reserve account and the economic guaranty fund 

as provided in B 17-6-308, MCA, is invalid under the Montana 

Constitution. This opinion, without the filing of further 

instruments or orders shall be and constitute such a 

declaratory judgment. 

Except for activities related to the in-state 

investment fund, nothing in this opinion affects the validity 

of state actions through the capital investment fund or the 

economic development guaranty fund. Under Huber, supra, the 

"moral commitment" statutes of the latter two funds do not 

constitute a pledge of the state's credit to underpin the 

funds. 

i \... ,; J $LT4h&l.-c ' i 

, Justice i i &i" 

We concur: 

Chief Justice 

Justices 
Mr. Justice Frank B. Morrison, Jr. dissents as follows: 

I respectfully dissent. 

I find no real problem with the procedural and factual 

discussion found in the majority opinion. My first 

disagreement begins with whether a guarantee is an investment 

or a debt. 

In holding a guarantee to be a debt, the majority relies 

on Webster s definition of "investment" as being "the outlay 

of money usually for income or profit; capital outlay." Some 

reliance is also placed upon 5 28-11-101, MCA, which provides 

a guarantor agrees to answer for the debt of another. 

The majority fails to discuss the October 18, 1984, 

informal opinion of the Attorney General determining that a 

guarantee of a bond is a security and the purchase of a 

security is an investment; therefore, the guarantee of a bond 

is an investment. The opinion states: 

Neither "guarantee" nor "investment" is defined in 

the Montana Code. However, Black's Law Dictionary 

741 (5th Ed. 1979), defines "investment" as "to 

purchase securities of a more or less permanent 

nature . . . Security is defined by the Montana 

Code as the guarantee of a bond. Section 

30-10-103 (11) , MCA. 

The majority opinion also ignores the obvious - there is 

less risk associated with a guarantee of a bond than with the 

issuance of a bond. The State may collect from a solvent 

principal any money expended by the State as guarantor. 

Furthermore, according to S 17-6-308 (2) , MCA, the guarantee 

must provide that the board is fully subrogated to the rights 

of the obligee under the bond. A bond is not a debt under 

5 17-5-1523, MCA. This was affirmed in Huber v. Groff 

(1976), 171 Mont. 442, 558 P.2d 1124. If a bond is not a 

debt surely a guarantee of a bond is not a debt. 

Finally, a guarantee is a contingent liability. Doorly 

v. Butte and Western Silver Mines (1924), 71 Mont. 529, 533, 
230 P. 779, 780. The guarantee depends on a future uncertain 

event, the failure of the principal to pay the debt. 

Contingent liabilities are not debts. In Hanson v. City of 

Havre, et al., (1941), 112 Mont. 207, 212, 114 ~.2d 1053, 

1056, this Court said: 

The possibility that part of the bonds may have to 

be paid with monies obtained from the revolving 

fund which in turn is created by a tax levy on the 

property of the city does not create a city debt 

but is merely an arrangement whereby the city, 

through the revolving funds, loans money to the 

district, and for which it holds security in the 

form of a lien. 

The majority opinion finds the statutory scheme here at 

issue to be unconstitutional because: 

1) It uses coal tax monies for private purposes, 

as opposed to public purposes; 

2) It gives private individuals appropriations for 

industrial and benevolent purposes; and 

3) It violates the Unified Investment program by 

allowing guaranties of private obligations. 

This sweeping holding by the majority opinion is not 

supported by authority and runs contrary to well established 

law in this state. In Grossman v. State of Montana (1984), 

682 P.2d 1319, we said: 

The constitutional provision is not violated 

because the legislature may in making 

appropriations or other provisions in some way 

benefit incidentally various private individuals, 

associations or corporations not under the control 

of the state. As long as the provisions relating 

to the expenditures of the funds derived from the 

proceeds of the bonds are under the control of the 

state, the constitutional mandate [No 

appropriations shall be made for religious, 

charitable, industrial, educational, or benevolent 

purposes to any private individual, private 

association, or private corporation not under 

control of the State] is satisfied. 

Likewise, in Huber, supra, the appropriations were found 

to go to a public purpose despite benefit to private 

homeowners, because the Housing Board, which controlled the 

money, was a public corporation, not a private corporation. 
We said: "It received all its powers directly from the 

legislature and its duties and responsibilities are set out 

clearly by the statute which created it. " 171 Mont. at 457. 

The same can be sa.id about the Montana Economic Development 

Board in this instance. Therefore, under relevant precedent, 

the purpose of the legislation is public, not private. 

Likewise, the coal tax money is going to a public 

purpose. Our language in Grossman is instructive. We said: 

The question of whether a particular purpose for 

which taxes may be levied and collected is a public 

purpose is for the legislature in the first 

instance, and the courts will indulge every 

reasonable presumption in favor of the legislative 

decision in this respect. Lewis and Clark County 

v. Industrial Accident Board (1916), 52 Mont. 6, 

155 P. 268. 

Grossman, 41 St.Rep. at 822. 

Unfortunately, the effect of the majority opinion casts 

serious doubt on whether any different program could pass 

constitutional muster. 

The plaintiff contends that S.B. 349 is not a valid 

appropriation in that it does not specify a fixed amount of 

loans or guarantees that may be made by the Board and 

therefore does not comply with Article VIII, Section 14, of 

the 1972 Montana Consitution which provides: 

Except for interest on the public debt, no money 

shall be paid out of the treasury unless upon an 

appropriation made by law and a warrant drawn by 

the proper official in pursuance thereof. 

Defendant argues that an appropriation by the 

legislature is not required to validly authorize the In-State 

Investment Fund to be invested in a guarantee or loan as 

contemplated by S.B. 349 in that an investment is neither a 

debt nor an expenditure. 

Twenty-five percent of the coal severance tax trust fund 

constituting the in-state investment fund has been 

appropriated by act of the legislature. The defendant argues 
that the investment thereof, as opposed to the expenditure of 

the principal, does not require an appropriation. I agree. 

Just as a legislative appropriation is not required each time 

the Board of Investments invests each of the funds subject to 

its control under the Unified Investment Progam, neither 

should one be required each time the Montana Economic 

Development Board purchases a loan or issues its guarantee. 

The majority opinion fails to discuss the important 

constitutional issue of whether the legislature 

unconstitutionally delegated its authority to the Board in 

allowing it to set the limits of liability. The test is 

found in Douglas v. Judge (1977), 174 Mont. 32, 39, 568 P.2d 

530, where this Court said: 

. . . a statute is complete and validly delegates 

administrative authority when nothing with respect 

to a determination of what is the law is left to 

the administrative agency, and its provisions are 

sufficiently clear, definite, and certain to enable 

the agency to know its rights and obligation. 

Here the Board has been given specific guidelines for 

the investment of the in-state investment fund. Investments 

from the fund should: 

a) diversify, strengthen and stabilize the Montana 

economy, 

b 1 increase Montana employment and business 

opportunities, 

c) maintain a clean and healthful environment, and 

d) give preference to business investments that 

i) are for locally owned enterprised that are 

either expanding or establishing new operations; 

ii) provide jobs that will be substantially filled 

by Montana residents; 

iii) encourage or benefit the processing, 

refining, marketing and innovative use and 

promotion of Montana's agricultural products; or 

iv) benefit small and medium-sized businesses. 
Section 17-6-309, MCA. 

With respect to amounts, the Legislature has prohibited 

the use of the fund for: 

a) direct loans; 

b) investments that would result in one business 

enterprise receiving a benefit from or incurring a 

debt to the fund in excess of 10% of the prior 

fiscal year's coal severance tax revenue deposited 

in the fund; and 

c) participation in loans to an extent greater 

that 80% of the loan. 

Sections 17-6-310 through 312, MCA. 

I believe the guidelines are sufficiently definite and 

the delegation is lawful. In Grossman v. State of Montana, 

supra, we said: 

Here the enactments of the legislature are complete 

and delegate to the Board of Natural Resources and 

Conservation and the Department of Natural 

Resources and Conservation administrative authority 

which is sufficiently clear, definite and certain 

to enable the agencies to know their respective 

rights and obligations. Huber v. Groff (19761, 171 

Mont. 442, 558 P.2d 1124; Montana Milk Control 

Board v. Rehberg (1962), 141 Mont. 149, 376 P.2d 

508. Determinations of economic and environmental 

feasibility are far more appropriate in the 

administrative sector than in the legislative 

branch. There is nothing improper, 

constitutionally or otherwise, in the legislature 

making its authorizations contingent upon 

administrative decisions properly made in the 

executive side of the state government. 

I find Grossman to be controlling here. We should 

determine that the delegation of authority is constitutional. 

The plaintiff had the burden of persuasion in this case. 

He must show beyond a reasonable doubt that S.B. 349 violates 

some specific requirement of the Montana Constitution. If 

the constitutionality of an act is doubtful the court should 

resolve all doubts in favor of the validity of the act. 

Tipton v. Erickson (1933), 93 Mont. 446, 19 P.2d 227. The 

only troublesome feature I find is administrative rule, 
A.R.M. 5 8.97.413. After quoting the administrative rule the 

majority opinion states that: 

The potential liability of the state is for the 

full amount of all guaranties made by the Board 

which can be as great as two times the amount of 

the in-state investment fund. 

The administrative rule can not invalidate the statutory 

scheme. The heavy presumption in favor of constitutionality 

has not been overcome by plaintiffs. If the majority wished 

to find. the administrative rule to be an improper 

construction of the statutes it should have done so but 

should have preserved the integrity of the statutes 

themselves. 

Under previous decisions of this Court herein cited the 

basic statutory framework passes constitutional muster. I 

would issue a declaratory judgment upholding the statutory 

scheme.