No. 01-560 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

 

2002 MT 121N 

MONTGOMERY CONSTRUCTION, 

Petitioner and Appellant, 

v. 

MONTANA DEPARTMENT OF TRANSPORTATION, 

Respondent and Respondent. 

APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis and Clark, 

The Honorable Jeffrey M. Sherlock, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Jon A. Oldenburg, Attorney at Law, Lewistown, Montana 

For Respondent: 

Nick A. Rotering, Timothy W. Reardon; Montana Department of 

Transportation, Helena, Montana 

 Submitted on Briefs: April 25, 2002 

Decided: June 11, 2002 

 

Filed: 

__________________________________________ 

Clerk
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Chief Justice Karla M. Gray delivered the Opinion of the Court. 

¶1 Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 

1996 Internal Operating Rules, the following decision shall not be 

cited as precedent. It shall be filed as a public document with 

the Clerk of the Supreme Court and shall be reported by case title, 

Supreme Court cause number and result to the State Reporter 

Publishing Company and to West Group in the quarterly table of 

noncitable cases issued by this Court.

¶2 The First Judicial District Court, Lewis and Clark County, 

denied the petition of Montgomery Construction (Montgomery) for 

judicial review and upheld a decision of the State Tax Appeal Board 

(STAB) regarding Montgomery's state tax liability as a special fuel 

user for the time between July of 1993 and June of 1996. 

Montgomery appeals. We affirm. 

¶3 The issue is whether the District Court erred in denying 

Montgomery's petition for judicial review. 

 BACKGROUND 

¶4 Montgomery is a Montana construction business and a licensed 

"special fuel user"--that is, an operator of diesel fuel-consuming 

motor vehicles on the highways of Montana. See § 15-70-302(16) and 

(18), MCA. Pursuant to § 15-70-321, MCA, a tax of 273⁄4 cents per gallon is 

imposed on each gallon of special fuel used to operate a motor vehicle upon, or in connection 

with a construction contract on, public roads in Montana. The tax is enforced by the 

Montana Department of Transportation (DOT). 
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¶5 DOT conducted a fuel audit of Montgomery's records for the 

period from July of 1993 to June of 1996 which culminated in an 

assessment of $30,717.51, plus interest, for special fuel user tax 

due. Montgomery requested--and was granted--an informal telephone 

hearing on the assessment, for purposes of which it submitted a 

written compilation listing contracts it had worked, the number of 

days worked on--and value of--each contract, and whether it felt 

special fuel used for each job was taxable or not. The parties' 

disagreement centered on whether specific gravel crushing jobs 

performed by Montgomery were subject to the special fuel users tax. 

 Montgomery contended fuel used for jobs in which it merely crushed 

and stockpiled gravel is not subject to the fuel users tax because 

it did not operate its vehicles on the highways of Montana to 

complete those jobs. DOT determined, however, that based on the 

records provided by Montgomery, the special fuel used for the 

disputed jobs was taxable. Montgomery appealed to STAB. 

¶6 After a hearing, STAB issued findings, conclusions and an 

order determining that the disputed taxes are due and owing. STAB 

noted that § 15-70-323, MCA, requires special fuel users to keep 

records as required by DOT. STAB also noted that Rule 18.10.324, 

ARM, sets forth guidelines for record-keeping requirements relating 

to special fuel taxes and that, according to DOT, Montgomery had 

provided incomplete records. STAB determined Montgomery was 

obligated under Rule 18.10.202, ARM, to demonstrate off-road usage 

through adequate records, and DOT had established Montgomery did 
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not maintain records adequate to document the claim that the fuel 

in question is not taxable. 

¶7 Montgomery petitioned the District Court for judicial review, 

asserting STAB's decision was clearly erroneous in view of the 

reliable, probative, and substantial evidence of record and 

arbitrary or capricious and characterized by an abuse of discretion 

or an unwarranted exercise of discretion. Noting Montgomery had 

failed to provide a transcript of the STAB hearing or otherwise 

cite to the record at STAB, the District Court pointed out that it 

could not determine whether STAB's findings were supported by 

substantial evidence and not otherwise clearly erroneous. On that 

basis, the court rejected Montgomery's argument and concluded 

STAB's finding that Montgomery had failed to produce sufficient 

records in connection with special fuels was not clearly erroneous. 

 

 DISCUSSION 

¶8 Did the District Court err in denying Montgomery's petition 

for judicial review? 

¶9 The standards for judicial review of an agency decision are 

set forth in statute. The court may not substitute its judgment 

for that of the agency on factual questions, but may reverse or 

modify the agency's decision if substantial rights of the appellant 

have been prejudiced because, inter alia, the administrative 

findings are clearly erroneous in light of the reliable, probative 

and substantial evidence of record, the agency's interpretation of 

the law is incorrect or the agency's decision is "arbitrary or 
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capricious or characterized by abuse of discretion or clearly 

unwarranted exercise of discretion[.]" Section 2-4-704(2), MCA. 

¶10 Montgomery argues that one of its employees testified he kept 

records concerning which jobs were subject to the special fuel 

users tax, using a method taught to him by State of Montana 

Department of Revenue auditors. Montgomery also contends that STAB 

made clearly erroneous findings of fact and interpreted the law 

incorrectly because the records sought by DOT cannot be produced by 

Montgomery or any other special fuel user who is not in charge of 

the eventual use of stored gravel, when it is used, where it is 

used, or how it is used. According to Montgomery, the gravel may 

sit for years before it is used, other gravel may be stacked upon 

it, and "it would be impossible to ever document the use of the 

[gravel]." 

¶11 In a judicial review of a contested case, "[t]he review shall 

be conducted by the court without a jury and shall be confined to 

the record." Section 2-4-704(1), MCA. The party asserting error 

is obligated to insure the record contains all documents, 

discovery, and evidence which relate to the errors claimed. A 

party may not predicate error on an incomplete record. Miller v. 

Frasure (1994), 264 Mont. 354, 362, 871 P.2d 1302, 1307. Without a 

transcript of the testimony given at the STAB hearing or references 

to a record produced by Montgomery, the District Court was unable 

to review the basis for STAB's findings and conclusions. 

¶12 This Court is in the same position as the District Court. To 

the considerable extent that Montgomery's arguments depend on the 
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transcript of the STAB hearing, a record not before us, Montgomery 

has not established--and cannot establish--error by STAB in clearly 

erroneous findings of fact, erroneous conclusions of law or 

determinations which are arbitrary and capricious or characterized 

by an abuse of discretion or unwarranted exercise of discretion. 

¶13 Affirmed. 

/S/ KARLA M. GRAY 

We concur: 

/S/ JIM REGNIER 

/S/ JAMES C. NELSON 

/S/ PATRICIA COTTER 

/S/ JIM RICE