NO. 85-554 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

KINGSBURY DITCH CO., 

Petitioner and Respondent, 

DEPARTMENT OF NATURAL RESOURCES 

AND CONSERVATION, et al., 

Respondents and Appellants. 

F..PPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis & Clark, 

The Honorable W. W. Lessley, Judge presiding. 

COUNSEL OF RECORD: 

For A.ppellant: 

Jardine, Stephenson, Blewett & Weaver; K. Dale 

Schwanke argued for Pondera Canal, Great Falls, 

Montana 

Candace West, Dept. of Natural Resources, Helena, 

Montana; Donald D. MacIntyre argued for Dept. of 

Natural Resources, Helena, Montana 

For Respondent: 

Loble & Pauly; Lester Loble argued for Kingsbury 

Ditch Co., Helena, Montana 

Submitted: September 11, 1986 

Decided: October 9, 1986 

OCT 9 - ~86 

Filed: 

Clerk 
Mr. Justice William E. Hunt, Sr., delivered the Opinion of 

the Court. 

Kingsbury Ditch Company filed an application with the 

Department of Natural Resources and Conservation (DNRC) to 

change the point of use of a water right as required by the 

Water Use Act of 1973, 5 85-2-402, MCA (1983). Pondera 

County Canal and Reservoir Company and many others filed 

objections to the proposed change, and a hearing date was 

set. During the course of the proceedings, the DNRC hearing 

examiner made several procedural rulings. Kingsbury asked 

the Water Court to review two of those rulings. The Water 

Court reversed both rulings. The DNRC and Pondera appeal. 

We vacate and remand. 

Pondera raises this issue on appeal. Did judicial 

review properly lie from the interlocutory rulings of the 

hearing examiner? Both appellants raise the following two 

issues: (1) Whether the District Court erred in ordering 

that the burden of proof must be placed on the objector in a 

contested case hearing for a change of use application before 

the DNRC? (2) Whether the District Court erred in ordering 

the hearing examiner to impose discovery sanctions prior to 

hearing to assure compliance with petitioner's request for 

discovery? 

Kingsbury Ditch Company has a pre-1973 water right. 

Subsequent to the passage of the Water Use Act of 1973, they 

applied for DNRC approval to change the point of use of that 

water right as required by 5 85-2-402, MCA (1983). Public 

notice of the proposed change was given and a prehearing 

conference was scheduled. The hearing examiner detailed the 
issues for the prehearing conference in her order of October 

18, 1983. The order read: 

The issues i.n the Hearing will be whether the 

Applicant has shown existence of the statutory 

criteria for change in place and method of use 

pursuant to MCA 5 85-2-402. The Objectors -- have the 

burden of proof --- to show that their rights -- will be 

adverseq affected by the change proposed by the 

Applicant. (Emphasis added.) 

This order was clarified by another order issued by the 

hearing examiner on October 19, 1984. It read: 

[A! s in all administrative proceedings, the - 

Applicant bears the burden - of pursuasion (sic) on 

all ultimate issues, i.e.: the scope of the 

existing right subject to the change request, and 

lack of adverse affect to other appropriators. The 

Objectors herein bear the burden of production on 

the scope [and] existence of their riqhts, and the 

kind and character of adverse affect alleged. 

(Emphasis added.) 

After the prehea.ring conference was sched.uled, the 

hearing examiner ordered all parties to participate in 

discovery. Kingsbury served a discovery request on all 

parties on December 21, 1983. On December 23, 1983 the 

hearing examiner, in response to Kingsbury's motion, issued 

an order for discovery, requiring all parties to respond 

within 30 days to Kingsbury's discovery request. On January 

27, 1984, Kingsbury moved the hearing examiner to dismiss the 

objections of the objectors who failed to respond to the 

discovery request. 

The hearing examiner stated that she has discretion as a 

hearing examiner to order discovery and impose sanctions for 

failure of a party to comply with her order. She noted that 

numerous objectors were unrepresented by counsel, and their 

ability to respond. to discovery requests was limited. One 

such objector who attended the prehearing status conference 

indicated a willingness to respond to the discovery request 

but an understandable inability to comprehend exactly what a 
response should entail. The hearing examiner ruled that 

dismissal is a harsh sanction, especially against one 

unrepresented by counsel in an administrative proceeding 

where water users typically appear pro E. Further, there 

had been no allegations of bad faith on the part of 

non-responsive parties. She held there was a less drastic 

means to protect Kingsbury's fundamental right to fairness 

and procedural due process. She denied the motion to dismiss 

the objections without prejudice and ruled that if the 

objectors appeared at the hearing with substantive testimony 

of which Kingsbury was unaware, a continuance sufficient for 

Kingsbury to meet the evidence would be granted. 

Kingsbury sought judicial review of these two orders in 

the District Court. Judge Loble deemed himself disqualified 

and Judge Lessley assumed jurisdiction. The facts on appeal 

were stipulated to and following briefing Judge Lessley 

reversed both orders. 

He ruled: 

[Tlhe Hearing Examiner below will return to her 

original Order . . . namely "The objectors have the 

burden of proof to show that their rights will be 

adversely affected by the change proposed by the 

Applicant." 

and 

[Blefore the time set for the next hearing in this 

Cause, the Examiner shall prepare such Orders as 

are necessary to assure compliance with 

Petitioner's request for Discovery; that such Order 

will. carry the condition of Sanctions for failure 

to comply. 

On appeal, Pondera argues judicial review was not 

appropriate. Pondera contends that pursuant to MAPA, the 

only types of administrative orders that are subject to 

judicial review are final decisions in which the aggrieved 

party has exhausted his administrative remedies. Section 
2-4-702, MCA. The exception to that rule is $ 2-4-701, MCA, 

which allows review of a "preliminary, procedural, or 

intermediate agency action or ruling . . . if review of the 

final agency decision would not provide an adequate remedy." 

Pondera contends adequate relief is available by way of a 

review of the final agency decision. 

Pondera also argues that pursuant to $ 2-4-704, MCA, 

when judicial review is undertaken, the reviewing court may 

reverse or modify "if substantial rights of the appellant 

have been prejudiced" by administrative findings which are: 

violative of constitutional or statutory provisions; in 

excess of the statutory authority of the agency; made upon 

unlawful procedures; affected by other error of law; 

arbitrary or capricious; characterized by abuse of discretion 

or clearly unwarranted exercise of discretion. Pondera 

argues no prejudice to Kingsbury has ever been shown or 

alluded to and that the reviewing court did not have grounds 

to reverse. 

The orders appealed here are clearly intermediate, 

procedural orders of the hearing examiner. There has been no 

final decision as yet, nor an exhaustion of administrative 

remedies as required by S 2-4-702, MCA. A preliminary, 

procedural, or intermediate agency ruling may be reviewed if 

review of the final agency action would not provide an 

adequate remedy. Section 2-4-701, MCA. There has been no 

showing in this case that a review of the final agency action 

would provide an inadequate remedy. We therefore hold that 

judicial review did not lie from the orders of the hearing 

examiner. 

Since we have decided that judicial review is not 

proper, we decline to address the two remaining issues raised 
by appellants, instead we vacate the decision of the lower 

court and remand for further proceedings. 

We Concur: 

Chief Justice 

stices